James Benny picked up the monthly report that John Lynch left on his desk. He was pleased to see the favorable variance for operating income. He had pushed hard to exceed budgeted monthly production by 325 units. James was puzzled by some of line items in the report. He wonders whether it's an error that most of the operating expenses are higher than the budget after all his hard work to manage the production line to improve efficiency and reduce costs. The report James reviewed is shown below: Actual Budget Variance Units produced and sold 13,425 13,100 Sales revenue $2,550,750 $2,449,700 325 Favorable $101,050 Favorable: Direct material 738,375 720,500 17,875 Unfavorable Direct labor 349.050 340,600 8,450 Unfavorable Variable manufacturing overhead 371.215 366,800 4.415 Unfavorable Variable selling expenses 120,825 117.900 2,925 Unfavorable Variable administrative expenses 53.700 52,400 1,300 Unfavorable. Contribution margin 917,585 851,500 66,085 Favorable Fixed manufacturing overhead 147,975 144,100 3,875 Unfavorable Fixed selling expenses 88,905 91,700. 2,795 Favorable Fixed administrative expenses 169,955 170,300 345 Favorable Operating income $510,750 $445,400 $65,350 Favorable