Happy Bubbles, Inc. produces multicolored bubble solution used for weddings and other events. The company sold 70,000 bubble kits during October, and its actual operating income was as follows: Click the icon to view the actual income statement.) The company's flexible budget income statement for October follows: Click the icon to view the flexible budget income statement.) Read the requirements 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 balance, make sure to enter "o" in the appropriate column. Label each variance as favorable (F) or unfavorable (U). A variance of zero is considered favorable) Happy Bubbles, Inc. Income Statement Performance Report For the month ended October 31 Actual Flexible Budget Volume Master Flexible Budget Variance Variance Budget Output units Sales revenue Variable expenses Cost of goods sold Sales commissions expense Utility expense Choose from any list or enter any number in the input fields and then continue to the next question. Utility expense Fixed expenses Salary expense Depreciation expense Rent expense Utility expense Total expenses Operating income Requirement 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 Most of the difference between master budget operating income and actual operating income resulted from bubble kits than expected Requirement 3. What is Happy Bubbles' master budget variance? Explain why the income statement performance report provides Happy Bubbles' managers with more useful information than the simple master budget variance. What insights can Happy Bubbles managers draw from this performance report? Choose from any list or enter any number in the input fields and then continue to the next question. . Happy Bubbles, Inc. produces multicolored bubble solution used for weddings and other events. The company sold 70,000 bubble kits during October, and its actual operating income was as follows: (Click the icon to view the actual income statement.) The company's flexible budget income statement for October follows: Click the icon to view the flexible budget income statement.) Read the requirements AUTO Operating income Requirement 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 Most of the difference between master budget operating income and actual operating income resulted from bubble kits than expected. Requirement 3. What is Happy Bubbles' master budget variance? Explain why the income statement performance report provides Happy Bubbles' managers with more useful information than the simple master budget variance. What insights can Happy Bubbles' managers draw from this performance report? Happy Bubbles' master budget variance is $ meaning that its operating income is than expected Choose two reasons why the income statement performance report provides Happy Bubbles' managers with more information than the simple master budget variance. These variances suggest that the marketing department did a job by selling kits than expected, at a sale price than expected Choose from any list or enter any number in the input fields and then continue to the next question Data Table Happy Bubbles, Inc. Income Statement Month Ended October 31 $ 208,000 Sales revenue ..... Variable expenses: Cost of goods sold Sales commissions ...... $ 88,300 22,500 Utility expense 3,500 Fixed expenses: Salary expense Depreciation expense 32,300 Rent expense 20,000 7,850 6,000 Utility expense Total expenses. $ 180,450 $ 27,550 Operating income Print Done Happy Bubbles, Inc. Flexible Budget Income Statement Month Ended October 31 Flexible Budget per Output Unit fe Output Units (Kits) 65,000 70,000 75,000 Sales revenue $ 2.90 $ 188,500 $ 203,000 $ 217,500 or Variable expenses: 1.25 81,250 Cost of goods sold Sales commissions 93,750 87,500 21,000 0.30 19,500 22,500 0.05 3,250 3,500 3,750 im Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense 30,000 30,000 20,000 8.000 33,000 23,000 20,000 8.000 han 12.000 Print Done Data Table ITUANI Budget per Output Unit Output Units (Kits) 65,000 70,000 75,000 Sales revenue $ 2.90 $ 188,500 $ 203,000 $ 217,500 1.25 87,500 93,750 81,250 19,500 0.30 21,000 22,500 Variable expenses: Cost of goods sold Sales commissions Utility expense Fixed expenses: Salary expense Depreciation expense 0.05 3,250 3,500 3,750 30,000 30,000 33,000 20,000 20,000 23,000 Rent expense 8,000 6,000 8,000 6,000 12,000 6,000 Utility expense Total expenses $ 168,000 $ 176,000 $ 194,000 Operating income $ 20,500 $ 27,000 $ 23,500 Print Done
