Flowing 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. E.: (Click the icon view the actual income statement.) The company's flexible budget income statement for August follows: :: (Click the icon view the flexible budget income statement.) Read the requirements Requirement 1. Prepare the income statement performance report. NoteThe master budget was based on expected sales volume of 65,000 bubble kits. (For accounts with a 0 balance, make sure to ente ahol och inre s fantahle (For unfavorable f A variance of zero is considered favorable Flowing Bubbles, Inc. Income Statement Month Ended August 31 $ Sales revenue 215 500 Variable expenses Cost of goods sold $ 84 500 Sales commissions 18,500 10,500 Utility expense Fixed expenses Salary expense 35.100 Depreciation expense 18,000 Rent expense 8,050 Utility expense 6.000 $ Total expenses 180 650 $ 34 850 Operating income Flowing Bubbles, Inc. Flexible Budget Income Statement Month Ended August 31 Flexible h Budget per Output Unit Output Units (Kits) 65,000 70.000 75.000 Sales revenue $ 2.95 $ 191,750 $ 206,500 $ 221,250 Variable expenses Cost of goods sold 1.20 78,000 84,000 90.000 Sales commissions 0.25 16,250 17,500 18,750 Utility expense 0.15 9,750 10,500 11,250 Fixed expenses Salary expense 33,000 33,000 36,300 Depreciation expense 18,000 18,000 20.700 Rent expense 9,000 9,000 13,000 Utility expense 6,000 6,000 6,000 Total expenses $ 170,000 S 178,000 $ 196,000 $ 21,750 $ Operating income 28,500 $ 25,250 1. Prepare an income statement performance report for August. 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 Flowing Bubbles' master budget variance? Explain why the income statement performance report provides Flowing Bubbles' managers with more useful information than the simple master budget variance. What insights can Flowing Bubbles' managers draw from this performance report? 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 or in the appropriate column Flowing Bubbles, Inc. Income Statement Performance Report For the month ended August 31 Actual Flexible Budget Variance Flexible Budget Master Volume Variance Budget H 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 for more Requirement 2. What accounts for most of the difference between actual operating income and master budget operating income? The V 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 Flowing Bubbies' master budget variance? Explain why the income statement performance report provides Flowing Bubbles managers with more useful information than the simple master budget variance What insights can Flowing Bubbles managers draw from the perfom report? Flowing Bubbles master budget variance is . meaning that its operating income is than expected Choose two reasons why the income statement performance report provides Flowing Bubbles managers with more information than the simple master budget variance These variances suggest that the marketing department dida ob by seling sots than expected, at a sale price than expected