Blowing Bubbles, Inc. produces multicolored bubble solution used for weddings and other events. The company sold 70,000 bubble kits during August, 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 August follows: (Click the icon to view the flexible budget income statement.) Read the requirements. DO 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 (O). A variance of zero is considered favorable.) ata lable Blowing Bubbles, Inc. Income Statement Month Ended August 31 $ Sales revenue 220,000 ---- Variable expenses: Cost of goods sold $ 87,600 Sales commissions 12,000 Utility expense 14,000 ---- Fixed expenses: Salary expense Depreciation expense I 32,300 20,000 Rent expense 9.150 5,000 Utility expense Total expenses. $ 180,050 S Operating income 39.950 Budget per Output Unit Output Units (Kits) 65,000 70,000 75,000 Sales revenue $ 3.05 $ 198,250 $ 213,500 $ 228,750 1.25 81.250 87.500 93,750 0.15 9.750 10,500 11,250 Variable expenses: Cost of goods sold Sales commissions Utility expense Fixed expenses Salary expense Depreciation expense 0.20 13,000 14,000 15,000 30,000 30,000 33,000 20,000 20.000 23,000 Rent expense 10,000 5,000 10,000 5,000 16,000 5,000 Utility expense Total expenses $ 169.000 S 177,000 $ 197,000 Operating income S 29.250 $ 36.500 $ 31,750 Actual Flexible Volume Flexible Budget Variance Master Budget Variance Budget Output units Sales revenue Variable expenses: Cost of goods sold Sales commissions expense Utility expense Fored expenses: Salary expense Depreciation expense Rent expense Utility expense Total expenses Operating income Choose from any list or enter any number in the input fields and then continue to the next question Requirement 2. What accounts for most of the difference between actual operating income and master budget operating income? The for operating income is larger than the Most of the difference between master budget operating income and actual operating income resulted from bubble kits than expected. Requirement 3. What is Blowing Bubbies' 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? Blowing Bubbles' master budget variance for operating income is This means that operating income is than expected Choose two reasons why the income statement performance report provides Blowing Bubbles managers with more information than the simple master budget variance. job by selling kits than expected, at a sale price than These variances suggest that the marketing department did a expected Choose from any list or enter any number in the input fields and then continue to the next