Dunlop Company has provided the following 2018 data:

Budget
Sales	$	400,000
Variable product costs		163,000
Variable selling expense		40,000
Other variable expenses		3,000
Fixed product costs		10,500
Fixed selling expense		20,000
Other fixed expenses		1,600
Interest expense		650
Variances
Sales		3,200	U
Variable product costs		2,600	F
Variable selling expense		1,250	U
Other variable expenses		600	U
Fixed product costs		110	F
Fixed selling expense		195	F
Other fixed expenses		75	U
Interest expense		50	F

Required

a. & b. 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).)

DUNLOP COMPANY Internal Income Statement for 2018 Budget Actual Variance Effect Sales Variable expenses: Fixed expenses