P10-44A - Prepare and interpret a performance report (Learning Objective) - Managerial Accounting 4th Edition

DATA P10-43A

	Flexible Budget
	55,000	60,000	65,000
Sales	170,500	186,000	201,500
Variable expense:
Cost of goods sold	68,750	75,000	81,250
Sales commissions	13,750	15,000	16,250
Utilities expense	5,500	6,000	6,500
Fixed expenses:
Salary expense	30,000	30,000	30,000
Depreciation expense	20,000	20,000	20,000
Rent expense	15,000	15,000	15,000
Utilities expense	7,000	7,000	7,000
Total expenses	160,000	168,000	176,000
Operating income	10,500	18,000	25,500

P10-44A Prepare and interpret a performance report (Learning Objective 2) Refer to the Outrageous Bubbles data in P10-43A. The company sold 60,000 bubble kits during March, and its actual operating income was as follows: OUTRAGEOUS BUBBLES, INC Income Statement Month Ended March 31 Sales revenue. Variable expenses: $194,000 Cost of goods sod. 75,500 ..16,500 6,000 Utility expense Fixed expenses: Salary expense. Depreciation expense . Rent expens Utility expense.. 32,200 20,000 14,550 7,000 $171,750 S22.250 Total expenses.. Operating income Requirements 1. Prepare an income statement performance report for March. 2. What accounts for most of the difference between actual operating income and master budget operating income? 3. What is Outrageous Bubbles' master budget variance for operating income? Explain why the income statement performance report provides Outrageous Bubbles' managers with more useful information than the simple master budget variance. What insights can Outrageous Bubbles managers draw from this performance report? P10-44A Prepare and interpret a performance report (Learning Objective 2) Refer to the Outrageous Bubbles data in P10-43A. The company sold 60,000 bubble kits during March, and its actual operating income was as follows: OUTRAGEOUS BUBBLES, INC Income Statement Month Ended March 31 Sales revenue. Variable expenses: $194,000 Cost of goods sod. 75,500 ..16,500 6,000 Utility expense Fixed expenses: Salary expense. Depreciation expense . Rent expens Utility expense.. 32,200 20,000 14,550 7,000 $171,750 S22.250 Total expenses.. Operating income Requirements 1. Prepare an income statement performance report for March. 2. What accounts for most of the difference between actual operating income and master budget operating income? 3. What is Outrageous Bubbles' master budget variance for operating income? Explain why the income statement performance report provides Outrageous Bubbles' managers with more useful information than the simple master budget variance. What insights can Outrageous Bubbles managers draw from this performance report