a) Based only on the information provided above, prepare a contribution format income statement for BBQ & Balloons.

b) Prepare the planning budget using an expected level of activity of selling 300 barbecues and 200 balloons and compare the planning budget with the actual results and identify the sales-volume variance and the flexible-budget variance.

c)Explain who is to blame for i) the differences identified in the sales-volume variance and ii) the flexible-budget variance and what may have caused such differences.

Each barbecue is sold for $5.00, and each balloon is sold for $2.00. Throughout the two weekend days, the four friends were able to sell 300 barbecues and 170 balloons. The four friends did not have to bother about the stock of sausage and bread or balloons; they arranged with a supplier and had to pay only $0.25 per barbecue served (a slice of bread and a sausage) and $0.07 for each balloon. For the sake of remuneration, the friends have agreed that each one would receive $200 for the two days of hard work as labour cost. Besides the costs of labour and material, the four friends had other costs for the two days. For the sake of simplicity, two costs were related to the production process, which were leasing a BBQ ($400) and a balloon pump ($50) during the weekend. The other two costs were related to sales and administrative tasks, which were leasing a gazebo ($100) and getting a permit for having the stand outside the shopping centre ($250) during the weekend. In order to assess the performance of their enterprise, the four friends decided to compare the actual results with their planning budget. Table 2-Actual Results