Everlasting ?Bubbles, Inc. produces multicolored bubble solution used for weddin

Question

Everlasting ?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:

1.

Prepare an income statement performance report for January. ?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.

Income Statement Month Ended January 31 Sales Revenue $225,100 Variable Expenses Cost of Goods Sold $88,250 Sales Commission $15,500 Utility Expense $10,500 Fixed Expenses: Salary Expense $35,100 Depreciation Expense 18,000 Rent Expense 8,350 Utility Expense 3,000

Explanation / Answer

Actual Flexible budget variance Flexible budget Volume variance Planning budget Output units 70000 70000 65000 Sales revenue 225100 8100 F 217000 15500 F 201500 Variable expense Cost of goods sold 88250 750 U 87500 6250 U 81250 Sales commission expense 15500 1500 U 14000 1000 U 13000 utility expense 10500 0 10500 750 U 9750 Fixed expense Salary expense 35100 2100 U 33000 0 33000 Depreciation expense 18000 0 18000 0 18000 Rent expense 8350 650 F 9000 0 9000 Utility expense 3000 0 3000 0 3000 Total expense 178700 3700 U 175000 8000 U 167000 Net operating income 46400 4400 F 42000 7500 F 34500

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