Great Bubbles, Inc., produces multicolored bubble solution used for weddings and other events. (Click the icon to view the master budget income statement) Great Bubbles plant capacity is 72,500 kits. If actual volume exceeds 72,500 kits the company must expand the plant in that case, salaries will increase by 10% depreciation by 15%, and rent by $6,000. Foxed utilities will be unchanged by any volume increase Requirements 1. Prepare flexible budget income statements for the company, showing output levels of 65,000, 70,000, and 75,000 kits 2. Graph the behavior of the company's total costs. Use total costs on the y-axis and volume (in thousands of bubble kits) on the x-acis. 3. Why might Great Bubbles managers want to see the graph you prepared in Requirement 2 as well as the columnar format analysis in Requirement 1? What is the disadvantage of the graphic approach? Requirement 1. Prepare flexible budget income statements for the company, showing output levels of 65,000, 70,000, and 75,000 kits (Enter the per unit information to two decimal places.) Great Bubbles, Inc. Flexible Budget Income Statement Month Ended May 31 Flexible Budget per Output Unit Output Units (Kits) Enter any number in the edit fields and then click Check Answer Unit Output Units (Kits) 70,000 75,000 65,000 Sales revenue Variable expenses Cost of goods sold Sales commissions Utility expense Fuced expenses Salary expense Enter any number in the edit fields and then click Check Answer. 5 parts remaining Clear All UULI vers. E: (Click the icon to view the master budget income statement.) Great Bubbles' plant capacity is 72,500 kits. If actual volume exceeds 72,500 kits the company must expand the plant. In that case, salaries will increase by 10%, depreciation by 15%, and rent by $6,000. Fixed utilities will be unchanged by any volume increase 1. Prepare flexible bude levels of 65,000, 70,0 2. Graph the behavior a and volume (in thous 3. Why might Great Bub Requirement 2 as wel What is the disadvant Sales commissions Utility expense Fixed expenses: Salary expense Depreciation expense Rent expense Utility expense Total expenses Operating income Enter any number in the edit fields and then click Check Answer The company's master budget income statement for May follows. It is based on expected sales volume of 65.000 bubble kits. Great Bubbles, Inc. Master Budget Income Statement Month Ended May 31 Sales revenue $ 201,500 Variable expenses. 81,250 13,000 9.750 Cost of goods sold Sales commissions Utility expense Fixed expenses Salary expense Depreciation expense 33,000 18,000 Month Ended May 31 Sales revenue $ 201,500 Variable expenses: Cost of goods sold Sales commissions 81.250 13,000 9,750 Utility expense Fixed expenses: Salary expense 33,000 18,000 Depreciation expense Rent expense 9,000 3,000 Utility expense S 167,000 Total expenses 34,500 Operating income Print Done