Milo Clothing Company produces mens ties since 1995. In order to reasonably plan and closely control their manufacturing costs, they use the budgeting system. The following budgeted and actual amounts are released to top management for 2020 and they asked you, a cost accountant, to prepare a performance budget report so that they can analyze all type of variances including both favourable and unfavourable.

Cost	Budget at 4,000 Units	Actual Amounts at 4,500 Units
Direct materials	$185,000	$188,000
Direct labour	226,000	250,000
Equipment depreciation	6,000	6,000
Indirect labour	22,000	25,000
Indirect materials	14,000	16,000
Rent and insurance	35,000	35,000

What is a static budget variance for Direct Materials?

Select one:

a. $3,000 F

b. $2,500 F