Answer the Following Questions Using the Information Below:
the Actual

Multiple Choice

Answer the following questions using the information below:
The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results.
$\begin{array}{lccc} & \text { Actual } & \text { Flexible } & \text { Static } \\& \text { Results } & \text { Budget } & \text { Budget } \\\text { Sales volume (in units) } & 11,000 & & 10,000\\\\\text { Sales revenues } & \$ 238,000 & \$ & \$230,000 \\\text { Variable costs } & 150,000 & \$ & 180,000\\\\\text { Contribution margin }& 88,000& \$ &50,000\\\\\text { Fixed costs } & 36,000 & \$ & 35,000\\\text { Operating profit } & \$ 52,000& \$& \$ 15,000\end{array}$
-The flexible budget will report ________ for the fixed costs.

A) $536,000
B) $35,000 Favorable
C) $35,000
D) $1,000 Unfavorable