XYZ Inc. sells a single product for a budgeted selling price of $20 per unit. Budgeted direct materials costs were $5 per unit, while budgeted direct labour and variable overhead costs were $3 and $2 respectively. Budgeted fixed overhead costs amount $25,000 per month. The company has a practical production capacity of 10,000 units per month. Budgeted variable selling costs are $2 per unit. Budgeted fixed selling costs are $2,000 per month. During the company's first month of operations, the company produced 10,000 units and sold 6,000 units at an average selling price of $18 per unit. Fixed costs were as budgeted. Direct material costs were $1 less per unit then budgeted. All other variable costs were as budgeted. The company's flexible budget variance was:

• Nil

• $8,000 favourable

• $12,000 favourable

• $6,000 unfavourable