P10-44A, Flowing Bubbles, Inc. produces multicolored bubble solution used for weddings and other events. The company sold 60,000 bubble kits during August and its actual operating income was as follows:

Flowing Bubbles, Inc. Flowing Bubbles, Inc. Flexible Budget Income Statement Month Ended August 31 Income Statement Flexible Month Ended August 31 Budget 194,100 Sales revenue r Oup Variable expenses: Unit Output Units (Kits) 55,000 60,000 65.000 Cost of goods sold 75,200 $ 170.500 S $ 3.10 196,000 S 201,500 Sales revenue Sales commissions 17,500 Variable expenses Utility expense 6,000 75,000 81,250 Cost of goods sold 125 68,750 Fixed expenses: Sales commissions 0.25 13,750 15,000 16,250 Salary expense 32,200 0.10 5,500 6,500 USiRy erpense 6,000 Depreciation expense 20,000 Fed expenses: Salary expense 30,000 30,000 33,000 Rent expense 14,450 Depreciation expense 20,000 20,000 23,000 7,000 Utility expense Rent erpense 15,000 15,000 19,000 172,350 Total expenses 7,000 7,000 7,000 Uity erpense 21,750 $ 160,000 $ 168,000 S 186,000 Total espenses Operating income 18,000 $ 15,500 10.500 S Operating income 1. Prepare an income statement performance report for August. Note: The master budget was based on expected sales volume of 55,000 bubble kits. 2. What accounts for most of the diference 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? Flowing Bubbles, Inc. Income Statement Performance Report For the month ended August 31 Flexible Budget Flexible Volume Actual Master Variance Budget Variance Budget Output units Sales revenue Variable expenses: Cost of goods sold Sales commissions expense Utlity expense Fixed expenses Salary expense Depreciation expense Rent expense Utity expense Total expenses Operating income Choose from any list or enter any number in the input flelds and then click Check