lowing Bubblzs, Inc. Frcduc muticolored bubb c solution usedor wddngs and ather
ID: 2552920 • Letter: L
Question
lowing Bubblzs, Inc. Frcduc muticolored bubb c solution usedor wddngs and ather events. The company sald G0,000 buoble kts during May, and EHH IClick the ican to view the actual income statement The compeny's fexitle bucget incume staterment or May folums ECick thiun lu viswe ele budget income lnt. actual operatng income wa: as iellw Requirement 1. Prepare the income statement performence report. Nore. The master budget eas based on expected seles volume of 55.000 butble kis. For accouns with a 0 balance, make sure to enter "0" in the appropriate column.Label each variance as favor able F ur unfavor able (U lowing Bubbles, Ine Income Statcment Perfonmance Report For the month ended Muy 31 O Data Table Data Table Hlexlble Budgat Variance Flowing Rubbles, In Flexible Budget Income Statemen Month Ended May 31 Hlexibla Flowing Bubbles, Inc. Income Statemant Month Ended Mary 31 Budget O units Sales reverue Varlable expanses Sacs revenuc 5 182,500 per Outpt UnH Cost uf guuds sold Salas comian pansa Utliy expense Cest of goeds sald S 75200 55,00 , 500 aks rewenuc S 2.90 9 159 500$ 174000 S 188,500 Udity expns Fixed expenses Solary expense Cost ofgaeds sold alary xparn Deprecistion expense 1.25 0.20 0.15 G3,50500 ,25D 11.000 12000 3.000 3 250 20,000 Ren expense tility cxnas Fixed expeees CCo30 0000 20 23,000 loal apansas Salary axpansn Depreciation expense 5 165 20 ? Operaing income 1 CO 1 DDD Chocse rem any Ist or enter any number in the inpur fTelds and then click Ceck Answer Pn Cone 155,cO 163 n 181 DD $1500 $ 11000S 7,500 Operating incomeExplanation / Answer
1.
2. The increase in sales revenue accounts for most of the difference between the actual operating income and master budget operating income.
3. Flowing Bubbles' master budget variance is $15700 - $4500 = $11200 F.
The income statement performance report is more useful than the simple master budget variance because it breaks down the master budget variance into the flexible budget or spending variance and the volume variance by which managers can identify the exactly the variances which arise due to a change in volume of activity and those that are caused due to change in rates.
Flowing Bubbles, Inc. Income Statement Performance Report For the Month Ended May 31 Actual Flexible Budget Variance Flexible Budget Volume Variance Master Budget Output units 60000 0 60000 5000 F 55000 Sales revenue 182500 8500 F 174000 14500 F 159500 Variable expenses: Cost of goods sold 75200 200 U 75000 6250 U 68750 Sales commissions expense 14250 2250 U 12000 1000 U 11000 Utility expense 9000 0 9000 750 U 8250 Fixed expenses: Salary expense 32200 2200 U 30000 0 30000 Depreciation expense 20000 0 20000 0 20000 Rent expense 10150 850 F 11000 0 11000 Utility expense 6000 0 6000 0 6000 Total expenses 166800 3800 U 163000 8000 U 155000 Operating income 15700 4700 F 11000 6500 F 4500Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.