Question
P 10-43A Outrageous Bubbles, Inc., produces multicolored bubble solution sued for weddings and other events. The companys master budget income statement for March follows. It
P 10-43A Outrageous Bubbles, Inc., produces multicolored bubble solution sued for weddings and other events. The companys master budget income statement for March follows. It is based on expected sales volume of 55,000 bubble kits. Outrageous Bubbles, Inc. Income Statement Month ended March 31 Sales revenue $170,500 Variable expenses: Cost of goods sold...68,750 Sales commissions......................13,750 Utilities expense.......................5,550 Fixed expenses: Salary expense... 30,000 Depreciation expense. 20,000 Rent expense.. 15,000 Utilities expense7,000 Total expenses...160,000 Operating income...10,500 Outrageous Bubbles plant capacity is 62,500 kits. If actual volume exceeds 62,500 kits, the company must expand the plant. In that case, salaries will increase by 10%, depreciation by 15%, and rent by 4,000. Fixed utilities will be unchanged by any volume increase.
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