Anthony Jarvis is the controller of Sandhill Industries. He prepared the following budgeted income statement at various levels of sales. After careful review, and after discussions with the sales and production managers, the CEO determines that the best alternative is to base the budget on a sales volume of 30000 units. Budgeted Income Statements Units 20000 30000 40000 Sales $1380000 $2070000 $2760000 Variable costs 300000 450000 600000 Direct material Direct labor 260000 390000 520000 Overhead 280000 420000 560000 840000 1260000 1680000 Total variable costs Contribution margin Fixed costs 540000 810000 1080000 69000 69000 69000 Overhead Rent 53000 53000 53000 Insurance 35000 35000 35000 22000 22000 22000 Advertising Total fixed costs 179000 179000 179000 Operating income $361000 $631000 $901000 Actual results for the year were 27000 units, reflected in the following income statement: Sales $1890000 Variable costs Direct material Direct labor 432000 378000 378000 Overhead Total variable costs Contribution margin Fixed costs Overhead 1188000 702000 67200 Rent 48800 Insurance 32100 17000 Advertising Total fixed costs 165100 Operating income $ 536900 What is the flexible budget variance for direct material? O $27000 favorable $27000 unfavorable O $18000 favorable O $45000 unfavorable