Answer the Following Questions Using the Information Below:
as Part

question 9

Multiple Choice

Answer the following questions using the information below:
As part of the budgeting process,Garden Gnomes Incorporated had developed the following static budget for the third quarter.Garden Gnomes is in the process of preparing the flexible budget and understanding the results.The actual information relates to the third quarter.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 13000 & \underline{\quad\quad} & 12000 \\& & & \\\text { Sales revenues } & \$ 257500 & \$ &\$ 250000 \\\text { Variable costs } & 154000 & \$\underline{\quad\quad} &\underline{180000} \\ & & & \\\text { Contribution margin } & 103500 & \$ & 70000 \\& & & \\\text { Fixed costs } & 50500 & \$\underline{\quad\quad} & 49500 \\\text { Operating profit } & \$ 53000 & \$\underline{\quad\quad} & \$ 20500\end{array}$

-The PRIMARY reason for high actual operating profits was:

• A)lower sales volume than planned.
• B)higher sales volume than planned.
• C)the variable-cost variance.
• D)increased fixed costs.

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