Flowing Bubbles, Inc. produces multicolored bubble solution used for weddings and other events. The company sold 60,000 bubble kits during October, and its actual operating income was asfollows:

i Data Table X Flowing Bubbles, Inc. Income Statement Month Ended October 31 Sales revenue . . 182, 100 Variable expenses: Cost of goods sold 75,400 Sales commissions 15,100 Utility expense 9,000 Fixed expenses: Salary expense 32,200 Depreciation expense 20,000 Rent expense 9.950 Utility expense 6,000 Total expenses. . .. 167,650 14,450 Operating income . . Print DoneFlowing Bubbles, Inc. Flexible Budget Income Statement Month Ended October 31 Flexible Budget per Output Unit Output Units (Kits] 55,000 30,000 85,000 Sales revenue 2.90 3 159,500 S 174,000 $ 188,500 Variable expenses: Cost of goods sold 1.25 68,750 75,000 81,250 Sales commissions 0.20 11,000 12,000 13,000 Utility expense 0.15 8,250 9,000 9,750 Fixed expenses: Salary expense 30,000 30,000 33,000 Depreciation expense 20,000 20,000 23,000 Rent expense 11,000 11,000 15,000 Utility expense 6,000 6,000 6,000 Total expenses $ 155,000 S 163,000 $ 181,000 3 4,500 S 7,500 Operating income 11,000 SRequirement 1. Prepare the income statement performance report. Note: The master budget was based on expected sales volume of 55,000 bubble kits. (For a of zero is considered favorable.) Flowing Bubbles, Inc. Income Statement Performance Report For the month ended October 31 Actual Flexible Budget Flexible Volume Master Variance Budget Variance Budget Output units Sales revenue Variable expenses: Cost of goods sold Sales commissions expense Utility expense Fixed expenses:Actual Flexible Budget Flexible Volume Master Variance Budget Variance Budget 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 incomeRequirement 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 V. Most of the difference between master budget operating income and actual operating income resulted from bubble kits than expected.Requirement 3. What is Flowing Bubbles' master budget variance for operating income? 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? Flowing 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 Flowing Bubbles' managers with more information than the simple master budget variance. These variances suggest that the marketing department did a v job by selling kits than expected, at a sale price than expected