1. Titov Company has provided the following 2014 data.

Budget
Sales	$	502,000
Variable product costs		191,000
Variable selling expense		46,000
Other variable expenses		3,000
Fixed product costs		15,700
Fixed selling expense		23,900
Other fixed expenses		1,700
Interest expense		700
Variances
Sales		8,400	U
Variable product costs		4,600	F
Variable selling expense		2,000	U
Other variable expenses		1,600	U
Fixed product costs		300	F
Fixed selling expense		430	F
Other fixed expenses		190	U
Interest expense		140	F

Required:

a.

Prepare a budgeted and actual income statement for internal use. Separate operating income from net income in the statements. Calculate variances and identify them as favorable (F) or unfavorable (U) by comparing the budgeted and actual amounts determined. (Select "None" if there is no effect (i.e., zero variance).)

TITOV COMPANY

Internal Income Statement for 2014
	Budget	Actual	Variance
Sales
Variable expenses:
Product costs	$(191,000)		$4,600
Selling expenses	(46,000)		2,000
Other expenses	(3,000)		1,600
Contribution margin
Fixed expenses:
Product costs	$(15,700)		$300
Selling expenses	(23,900)		430
Other expenses	(1,700)		190
Operating income (loss)
Interest expense
Net income (loss)