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Flowing Bubbles, Inc, produces multicolored bubble solution used for weddings and other events. The company sold 70,000 bubble kits during January 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 January follows Click the loon to view the flexible budget Income statement) Read the resurements CELLE 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 in the appropriate column Label each variance as favorable (F) unfavorable (U) A variance of 200 is considered favorable) Flowing Bubbles, Inc. Income Statement Performance Report For the month ended January 31 Actual Master Flexible Budget Variance Flexible Budget Volume Variance Budget Output units Sales revenue Variable expenses Cost of goods sold Sales commissions expense Utility expense Faced expenses Salary expenso 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 Sarger 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 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 vantanon. 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 Bubble managers with more information than the simple master budget variance job by selling kits than expected, at a sale price These variances suggest that the marketing department did a expected - Data table Flowing Bubbles, Inc. Flexible Budget Income Statement Mon Ended January 31 Flexible Budget per Output Unit Output Units (Kits) 65,000 70,000 75,000 $ 2.90 $ 188,500 $ 203,000 $ 217,500 1.25 81,250 0.30 19,500 Sales revenue Variable expenses: Cost of goods sold Sales commissions Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense 87,500 21,000 3,500 93,750 22,500 3,750 0.05 3,250 33,000 33,000 18,000 18,000 15,000 5,000 36,300 20,700 19,000 5,000 15,000 5,000 Utility expense Total expenses $ 175,000 $ 183,000 $ 201,000 $ Operating income 13,500 $ 20,000 $ 16,500 Print Done Data table Flowing Bubbles, Inc. Income Statement Month Ended January 31 $ Sales revenue. 208,000 Variable expenses: $ A 87,750 Cost of goods sold Sales commissions 24,000 3,500 Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense 35,100 18,000 14,350 5,000 Utility expense $ 187,700 Total expenses..... $ 20,300 Operating income Flowing Bubbles, Inc, produces multicolored bubble solution used for weddings and other events. The company sold 70,000 bubble kits during January 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 January follows Click the loon to view the flexible budget Income statement) Read the resurements CELLE 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 in the appropriate column Label each variance as favorable (F) unfavorable (U) A variance of 200 is considered favorable) Flowing Bubbles, Inc. Income Statement Performance Report For the month ended January 31 Actual Master Flexible Budget Variance Flexible Budget Volume Variance Budget Output units Sales revenue Variable expenses Cost of goods sold Sales commissions expense Utility expense Faced expenses Salary expenso 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 Sarger 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 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 vantanon. 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 Bubble managers with more information than the simple master budget variance job by selling kits than expected, at a sale price These variances suggest that the marketing department did a expected - Data table Flowing Bubbles, Inc. Flexible Budget Income Statement Mon Ended January 31 Flexible Budget per Output Unit Output Units (Kits) 65,000 70,000 75,000 $ 2.90 $ 188,500 $ 203,000 $ 217,500 1.25 81,250 0.30 19,500 Sales revenue Variable expenses: Cost of goods sold Sales commissions Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense 87,500 21,000 3,500 93,750 22,500 3,750 0.05 3,250 33,000 33,000 18,000 18,000 15,000 5,000 36,300 20,700 19,000 5,000 15,000 5,000 Utility expense Total expenses $ 175,000 $ 183,000 $ 201,000 $ Operating income 13,500 $ 20,000 $ 16,500 Print Done Data table Flowing Bubbles, Inc. Income Statement Month Ended January 31 $ Sales revenue. 208,000 Variable expenses: $ A 87,750 Cost of goods sold Sales commissions 24,000 3,500 Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense 35,100 18,000 14,350 5,000 Utility expense $ 187,700 Total expenses..... $ 20,300 Operating income