Charles Jarvis is the controller of Sunland 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 38000 units. 48000 $3360000 816000 720000 768000 2304000 Budgeted Income Statements Units 28000 38000 Sales $1960000 $2660000 Variable costs Direct material 476000 646000 Direct labor 420000 570000 Overhead 448000 60800 Total variable costs 1344000 1824000 Contribution margin 616000 836000 Fixed costs Overhead 70000 70000 Rent 54000 54000 Insurance 36000 36000 Advertising 23000 23000 Total fixed costs 183000 183000 Operating income $433000 $653000 1056000 70000 54000 36000 23000 183000 $873000 Actual results for the year were 35000 units, reflected in the following income statement: $2485000 Sales Variable costs Direct material 630000 560000 560000 1750000 735000 Direct labor Overhead Total variable costs Contribution margin Fixed costs Overhead Rent Insurance Advertising Total fixed costs 68200 49800 33100 18000 1 169100 Operating income $ 565900 What is the flexible budget variance for direct material? O $35000 favorable O $35000 unfavorable O $16000 favorable O $51000 unfavorable