Choice "D" is correct. The flexible budget variance is $20,000 unfavorable and represents the difference between actual performance and the budget at the achieved volume. Actual expenses are greater than the computed budget. The variance is unfavorable and is computed as follows:

Choice "c" is incorrect. The proposed answer is the volume variance, not the flexible budget variance. The volume variance is $10,000 favorable and represents the difference between the master budget (the budget at the initial volume forecast for the budget) and the flexible budget (the budget at the achieved volume). Because the achieved volume is less than the planned volume, the volume variance is favorable.Choice "a" is incorrect. The flexible budget variance is $20,000 unfavorable because actual expenditures are greater than budget amounts.Choice "b" is incorrect. The flexible budget variance is $20,000 unfavorable, not $10,000 unfavorable.