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George Jarvis is the controller of Oriole Industries. George prepared the following budgeted income statement at various levels of sales. After careful review of the budgeted income statements, 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 46000 units 56000 $3584000 Budgeted Income Statements Unit 36000 46000 Sales $2304000 $2944000 Variable costs Direct material 540000 690000 Direct labor 468000 598000 Overhead 504000 644000 Total variable costs 1512000 1932000 Contribution margin 792000 1012000 Feed costs Overhead 64000 64000 Rent 48000 48000 Insurance 30000 30000 Advertising 17000 17000 Total foxed costs 159000 159000 Operating income $633000 $853000 840000 728000 784000 2352000 1232000 64000 48000 30000 17000 159000 51073000 Actual results for the year were 43000 units, reflected in the following income statement: $2795000 688000 602000 602000 1892000 903000 Sales Variable costs Direct material Direct labor Overhead Total variable costs Contribution margin Fixed costs Overhead Rent Insurance Advertising Total fixed costs Operating income 64700 46300 29600 14500 155100 $ 747900 What is the sales volume variance for direct material? 543000 favorable $43000 unfavorable $2000 unfavorable O $45000 favorable

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