At 13000 direct labor hours, the flexible budget for indirect materials is $26000. If $28400 are incurred at 13400 direct labor hours, the flexible budget report should show the following difference for indirect materials:

$2400 favorable.

$2400 unfavorable.

$1600 favorable.

$1600 unfavorable.

Variance will be $1600 (unfavorable)

So option (d) will be the correct option

Explanation:

We have given indirect labor hours = 13000

And the flexible budget for indirect material = $26000

So indirect material cost [tex]=/frac{flexible / budget / for / indirect / material}{indirect / labor / hour}=/frac{$26000}{13000}=2 / per / direct / labor / hour[/tex

Budgeted Cost = 13400*2 = 26800

Actual Cost is given = $28400

So variance = $28400-$26800 = $1600 (unfavorable)

So option (d) will be the correct option