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 expenses 195 F

Other fixed expenses 75 U

Interest Expense 50 F

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) by comparing the budgeted and actual amounts in Requirement a.