Blowing Bubbles, Inc. produces multicolored bubble solution used for weddings and other events. The company sold 70,000 bubble kits during January, and its actual operating income was as follows: (Click the icon to view the actual income statement.) The company's flexible budget income statement for January follows: (Click the icon to view the flexible budget income statement.) Read the requirements. Requirement 1. Prepare the income statement performance report. Note: The master budget was based on expected sales volume of 65,000 bubble kits. (For accounts with a 0 balance, make sure to enter "0" in the appropriate column. Label each variance as favorable (F) or unfavorable (U). A variance of zero is considered favorable.) Blowing Bubbles, Inc. Output units Sales revenue Variable expenses: Cost of goods sold Sales commissions expense Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense Utility expense Total expenses Operating income Income Statement Performance Report For the month ended January 31 Actual Flexible Budget Variance Flexible Budget Volume Variance Master Budget Requirements 1. Prepare an income statement performance report for January. Note: The master budget was based on expected sales volume of 65,000 bubble kits. 2. What accounts for most of the difference between actual operating income and master budget operating income? 3. What is Blowing Bubbles' master budget variance for operating income? Explain why the income statement performance report provides Blowing Bubbles' managers with more useful information than the simple master budget variance. What insights can Blowing Bubbles' managers draw from this performance report? Print Done - X Data table Blowing Bubbles, Inc. Income Statement Month Ended January 31 Data table Blowing Bubbles, Inc. Flexible Budget Income Statement Month Ended January 31 Flexible $ 226,000 Sales revenue Variable expenses: Cost of goods sold 88,400 Sales commissions 16,250 Budget per Output Unit 65,000 Utility expense 10,500 Output Units (Kits) 70,000 $ 201,500 $217,000 $ 232,500 75,000 Fixed expenses: Sales revenue $ 3.10 Salary expense 35,100 Variable expenses: Depreciation expense 18,000 Cost of goods sold 1.25 81,250 87,500 93,750 Rent expense 8,850 Sales commissions 0.20 13,000 3,000 Utility expense Utility expense 0.15 9,750 10,500 14,000 15,000 11,250 180,100 Total expenses. Operating income Fixed expenses: 45,900 Salary expense 33,000 33,000 36,300 Depreciation expense 18,000 18,000 20,700 Rent expense 9,000 9,000 15,000 3,000 3,000 3,000 Utility expense Print Done $ 167,000 $ 175,000 $ 195,000 Total expenses $ 34,500 $ 42,000 $ 37,500 Operating income