Answer the Following Questions Using the Information Below:
the Actual

question 87

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 variable costs.

• A) $136,364
• B) $198,000
• C) $30,000
• D) $13,583

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Definitions:

Marginal Social Benefit

Marginal social benefit is the additional gain to society as a whole from an additional unit of a good or service.

Socially Optimal

Refers to a situation where goods or services are produced and consumed at a level that maximizes overall social welfare.

Pollution

The contamination of the environment with harmful or poisonous substances, adversely affecting the health of living organisms and ecosystems.

External Costs

Costs of an economic activity that are not borne by the participants but rather by other people or society at large.