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Neither team was in possession of the ball when the foul was committed, so 3-and-1 principles can't be applied, and this is a kick play, and the basic spot is the previous spot (50 yard line). Batting the ball from either end zone is a foul, so if the penalty is accepted team A/K may kick off from B/R 35 or decline the distance and kick from the 50. If the penalty is declined, possession is to B/R where it was muffed by B27, i.e. the 1 yard line. The choice to enforce or decline the penalty is not obvious.
The description doesn't read as if the impetus from the kickoff was spent before B27 muffed the ball, but if that's the case the result of the play would be a safety rather than B's ball at the 1.
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