Income Statement Month Ended May 31 $ 182,500 Sales revenue. Variable expenses: Cost of goods sold $ 75,800 Sales commissions 12,500 Utility expense 9,000 Fixed expenses: Salary expense 32,200 Depreciation expense 20,000 Rent expense 10,850 6,000 Utility expense $ 166,350 Total expenses.. $ 69 16,150 Operating income Month Ended May 31 Flexible Budget per Output Unit Output Units (Kits) 55,000 60,000 65,000 $ 2.90 $ 159,500 $ 174,000 $ 188,500 Sales revenue 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 Depreciation expense Rent expense Utility expense Total expenses Operating income 30,000 30,000 33,000 20,000 20,000 23,000 11,000 11,000 15,000 6,000 6,000 6,000 $ 155,000 $ 163,000 $ 181,000 199 $ 4,500 $ 11,000 $ 7,500 1. Prepare an income statement performance report for May. Note: The master budget was based on expected sales volume of 55,000 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? Blowing Bubbles, Inc. produces multicolored bubble solution used for weddings and other events. The company sold 60,000 bubble kits during May, and its actual operating income was as follows: Requirement 1. Prepare the income statement performance report. Note: The master budget was based on expected sales volume of 55,000 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. Income Statement Performance Report For the month ended May 31 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 Actual Flexible Budget Variance Flexible Budget Volume Master Variance Budget