Answer:
Paralith Incorporated
Duck Decoy Department
Flexible Budget for Third Quarter:
                                 Actual Results      Flexible Budget      Static Budget
Sales volume (in units) 10,000                   10,000                      8,000
Sales revenues       $239,000                $293,750                  $235,000
Variable costs            167,000                $ 230,000                  $184,000
Contribution margin $72,000                   $63,750                    $51,000
Fixed costs                  38,000                   $33,000                   $33,000
Operating profit       $34,000                   $30,750                     $18,000
Explanation:
a) Calculations for flexible budget:
Sales volume = 8,000/8,000 x 10,000 = 10,000 units
Sales revenue = $235,000/8,000 x 10,000 = $293,750
Variable costs = $184,000/8,000 x 10,000 = $230,000
Fixed Costs will remain at $33,000
b) A flexible budget is a budget that adjusts or flexes with changes according to the volume or activity level.  On the other hand, the static budget amounts do not change from the amounts established at the time that the static budget was prepared and approved.