Answer the Following Questions Using the Information Below:
as Part

question 202

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 flexible budget will report ________ for variable costs.

• A)$175 000
• B)$195 000
• C)$13 583
• D)$154 000

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Definitions:

Working Backward

A problem-solving strategy that starts with the outcome and works in reverse to find the solution.

Sub-goals

Intermediate objectives or milestones set as steps toward achieving a larger goal, helping to make complex tasks more manageable.

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering problem-solving and creativity.

Mental Set

A psychological tendency to approach problems in a certain way due to past experiences and what has worked previously.