Mayer Company has provided the following data for 2014:
Budget
Sales ............... $250,000
Variable product costs ........ 82,000
Variable selling expense ........ 23,000
Other variable expenses ......... 4,000
Fixed product costs ......... 35,000
Fixed selling expense ........ 13,000
Other fixed expenses ........ 1,000
Interest expense .......... 500
Actual results
Sales .............. 260,000
Variable product costs ....... 84,000
Variable selling expense ....... 22,000
Other variable expenses ....... 3,500
Fixed product costs ........ 32,000
Fixed selling expense ........ 11,000
Other fixed expenses ........ 4,000
Interest expense .......... 525

Required
a. Prepare in good form a budgeted and actual income statement for internal use. Separate operating income from net income in the statements.
b. Calculate variances and identify them as favorable (F) or unfavorable (U).