Refer to the Popping Bubbles' data in P10-49B. The company sold 70,000 bubble kits during March and
Question:
Data in P10-49B
Requirements
1. Prepare an income statement performance report for October.
2. What accounts for most of the difference between actual operating income and master budget operating income?
3. What is Popping Bubbles' master budget variance for operating income? Explain why the income statement performance report provides Popping Bubbles' managers with more useful information than the simple master budget variance. What insights can Popping Bubbles' managers draw from this performance report?
Transcribed Image Text:
POPPING BUBBLES, INC. Master Budget Income Statement Month Ended October 31 Sales revenue . Variable expenses: Cost of goods sold $211,000 $ 84,500 Sales commissions. 15,500 Utility expense . Fixed expenses: Salary expense . Depreciation expense Rent expense.. 14,000 35,100 18,000 10,550 Utility expense Total expenses.. Operating income. 5,000 $182,650 $ 28,350 POPPING BUBBLES, INC. Master Budget Income Statement Month Ended October 31 Sales revenue . $188,500 Variable expenses: Cost of goods sold 78,000 Sales commissions. 13,000 Utility expense Fixed expenses: Salary expense. Depreciation expense 13,000 33,000 18,000 Rent expense.. 11,000 Utility expense Total expenses . Operating income.. 5,000 $171,000 $ 17,500 ........
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