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Flowing Bubbles, Inc. Income Statement Performance Report For the month ended July 31 Actual Flexible Budget Master Flexible Budget Volume Variance Variance Budget 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 Choose from any list or enter number input fields and then click Check Answer 4 parts Clear All 4 remaining P10-50B (similar to) Question Help Flowing Bubbles, Inc. produces multicolored bubble solution used for weddings and other events. The company sold 70,000 bubble kits during July, and its actual operating income was as follows: E (Click the icon to view the actual income statement.) The company's flexible budget income statement for July follows: 2 (Click the icon to view the flexible budget income statement.) Read the requirements Data Table ,000 10 S Flowing Bubbles, Inc. Income Statement Month Ended July 31 211,000 Sales revenue Variable expenses: Cost of goods sold Sales commissions ..... $ 88,300 24,000 3,500 Utility expense Fixed expenses: Mas Bud! 35,100 Salary expense Depreciation expense Rent expense 18,000 14,650 5,000 Utility expense Total expenses 188,550 22,450 Operating income int Print Done ed on Braun: Managerial Accounting, 5e ht 2010 6 Data Table Flowing Bubbles, Inc. Flexible Budget Income Statement Month Ended July 31 Flexible Budget per Output Unit Output Units (Kits) 65,000 70,000 75,000 $ 188,500 $ 203,000 $ 217,500 Sales revenue $ 2.90 1.25 0.30 0.05 81,250 19,500 3,250 87,500 21,000 3,500 93,750 22,500 3,750 Variable expenses: Cost of goods sold Sales commissions Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense 33,000 18,000 15,000 5,000 175,000 $ 13,500 $ 33,000 36,300 18,000 20,700 15,000 19,000 5,000 5,000 183,000 $ 201,000 20,000 $ 16,500 Utility expense Total expenses Operating income $ $ Print Done Requirements 1. Prepare an income statement performance report for July. Note: The master budget was based on expected sales volume of 65,000 bubble kits. 2. What accounts for most of the difference 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? Print Print Done

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