Chase Green Racing, Inc., provides a full range of services to thoroughbred horse owners including boarding, training, and veterinary care. The table below provides both the budgeted and actual statements of operating income for the first quarter of 2018. Service revenues Less: Operating expenses Labor wages expense Insurance expense Rent expense Supplies and feed expense Operating income Budget $3,800,000 1,750,000 600,000 225,000 750.000 $ 475,000 Actual $3,950,000 1,820,000 575,000 225,000 795,000 $ 535,000 Required: Prepare a variance analysis to explain the differences between actual and budgeted amounts. Compute a variance for each line item and indicate whether each variance is favorable or unfavorable.