Sales results that are evaluated by a static budget might show
1) favorable differences that are not justified.
2) unfavorable differences that are not justified.

A) 1
B) 2
C) both 1 and 2.
D) neither 1 nor 2.

Static Budget

A fixed budget based on a specific level of activity and does not change with the actual level of activity.

Favorable Differences

Variations between budgeted and actual figures that are advantageous to the company, indicating better performance or savings.

Unfavorable Differences

Variances that occur when actual costs are higher than the budgeted or standard costs, often considered as negative variances.