Chapman Inc. sells a single product, Zud, which has a budgeted selling price of $38 per unit and a budgeted variablr cost of $26 per unit. Budgeted fixed costs for the year amount to $52,000. Actual sales volume for the year (61,000 units) fell 10,000 units short of budgeted sales volume. Actual fixef costs were $53,000.

1. with everything else held constant, what impact dod the shortfall in volume have on profitability for the year?

2. Was the effect favorable or unfavorable in terms of its effect on operating income?