Question

At 9,000 direct labor hours, the flexible budget for indirect materials is $27,000. If $28,000 of indirect materials costs are incurred at 9,200 direct labor hours, the flexible budget report should show the following difference for indirect materials_______.

Answer 1

Answer:

Variance will be $400

Explanation:

We have given number of labor hour = 9000

Budget for indirect material = $27000

Indirect material cost  $=\frac{27000}{9000}=3\ per\ direct\ labor\ hour$

We have given that there are 9200 direct labor hours

So budgeted cost = 9200×3 = $27600

We have given indirect material cost = $28000

So variance = $28000-$27600 = $400