Everlasting Bubbles, Inc. produces multicolored bubble solution used for weddings and other events. The company sold 50,000 bubble kits during May, and its actual operating income was as follows:
The company's flexible budget income statement for May follows:
Everlasting Bubbles, Inc. Income Statement Month Ended May 31 Sales revenue... $ 161,500 ......$ 62,900 10,500 10,000 Variable expenses: Cost of goods sold Sales commissions Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense 32,200 20,000 9,650 1000 $ 161,500 .....$ Sales revenue ........... Variable expenses: Cost of goods sold Sales commissions Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense 62,900 10,500 10,000 .... 32,200 20,000 9,650 4,000 149,250 12,250 Utility expense Total expenses $ $ Operating income ....... Everlasting Bubbles, Inc. Flexible Budget Income Statement Month Ended May 31 Flexible Budget per Output Unit Output Units (Kits) 45,000 50,000 55,000 $ 137,250 $ 152,500 $ 167,750 $ 3.05 Sales revenue Variable expenses: Cost of goods sold Sales commissions Utility expense 1.25 0.15 0.20 56,250 6,750 9,000 62,500 7,500 10,000 68,750 8,250 11,000 Fixed expenses: Salary expense Depreciation expense Rent expense 30,000 20,000 10,000 4,000 $ 136,000 $ $ 1,250 $ 30,000 33,000 20,000 23,000 10,000 15,000 4,000 4,000 144,000 $ 163,000 8,500 $ 4.750 Utility expense Total expenses Operating income Everlasting Bubbles, Inc. Income Statement Performance Report For the month ended May 31 Actual Flexible Volume Flexible Budget Variance Master Budget Budget Variance 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 Everlasting Bubbles, Inc. Income Statement Month Ended May 31 Sales revenue... $ 161,500 ......$ 62,900 10,500 10,000 Variable expenses: Cost of goods sold Sales commissions Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense 32,200 20,000 9,650 1000 $ 161,500 .....$ Sales revenue ........... Variable expenses: Cost of goods sold Sales commissions Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense 62,900 10,500 10,000 .... 32,200 20,000 9,650 4,000 149,250 12,250 Utility expense Total expenses $ $ Operating income ....... Everlasting Bubbles, Inc. Flexible Budget Income Statement Month Ended May 31 Flexible Budget per Output Unit Output Units (Kits) 45,000 50,000 55,000 $ 137,250 $ 152,500 $ 167,750 $ 3.05 Sales revenue Variable expenses: Cost of goods sold Sales commissions Utility expense 1.25 0.15 0.20 56,250 6,750 9,000 62,500 7,500 10,000 68,750 8,250 11,000 Fixed expenses: Salary expense Depreciation expense Rent expense 30,000 20,000 10,000 4,000 $ 136,000 $ $ 1,250 $ 30,000 33,000 20,000 23,000 10,000 15,000 4,000 4,000 144,000 $ 163,000 8,500 $ 4.750 Utility expense Total expenses Operating income Everlasting Bubbles, Inc. Income Statement Performance Report For the month ended May 31 Actual Flexible Volume Flexible Budget Variance Master Budget Budget Variance 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
