Titov Company has provided the following 2014 data.
Budget
Sales ................... $800,000
Variable product costs ............ 326,000
Variable selling expense ........... 80,000
Other variable expenses ........... 6,000
Fixed product costs .............. 21,000
Fixed selling expense ............ 40,000
Other fixed expenses ............ 3,200
Interest expense .............. 1,300
Variances
Sales .................... 6,400 U
Variable product costs ............. 5,200 F
Variable selling expense ........... 2,500 U
Other variable expenses ........... 1,200 U
Fixed product costs .............. 220 F
Fixed selling expense ............ 390 F
Other fixed expenses ............ 150 U
Interest expense .............. 100 F

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