Precious Bubbles, Inc. produces multicolored bubble solution used for weddings and other events. The company sold 70,000 bubble kits during March, and its actual operating income was as follows: (Click the icon to view the actual income statement.) The company's flexible budget income statement for March follows: (Click the icon to view the flexible budget income statement.) Read the requirements. Data table Data table Precious Bubbles, Inc. Flexible Budget Income Statement ce, make sure to enter "0" in Precious Bubbles, Inc. Income Statement Month Ended March 31 Month Ended March 31 Flexible Sales revenue $ 214,600 Variable expenses: Budget per Output Unit 65,000 Output Units (Kits) 70,000 75,000 Cost of goods sold $ 84,500 Sales commissions wwwww 19,750 Sales revenue $ 2.95 $ 191,750 $ 206,500 $ 221,250 Utility expense 10,500 Variable expenses: Fixed expenses: Cost of goods sold 1.20 Salary expense 35,100 Sales commissions 0.25 Depreciation expense 18,000 Utility expense 0.15 78,000 16,250 9,750 84,000 17,500 18,750 10,500 11,250 90,000 Rent expense 8,550 Fixed expenses: Utility expense 6,000 Salary expense 33,000 33,000 36,300 $ 182,400 Total expenses $ 32,200 Operating income Requirement 1. Prepare the income statement performance report. Note: The master budget was based on expected sales volume of 65,000 bubble kits. (For accounts with a 0 balance, make sure to enter "0" in the appropriate column Label each variance as favorable (F) or unfavorable (U). A variance of zero is considered favorable) Precious Bubbles, Inc. Income Statement Performance Report For the month ended March 31 Output un S Variable expenses: Cost of goods sold Sales commissions expense Utility Flood Salary Depreciation expense Rent expense Actual Flexible Budget Variance Flexible Budget Volume Master Variance Budget Uelly Total exper Operating income Requirement 2. What accounts for most of the difference between actual operating income and master budget operating income? for operating income is larger than the The Most of the difference between master budget operating income and actual operating income resulted from bubbles than expected. Requirement 3. What is Precious Bubbles master budget warence for operating income? Explain why the income statement performance report provides Precious Bubbles' managers with more useful information than the simple master budget variance. What insights can Precious Bubbles managers draw from this performance report? Precious Bubbles master budget variance for operating income is than expected This means that operating income is Choose two reasons why the income statement performance report provides Precious Bubbles' managers with more information than the simple master budget variance. These variances suggest that the marketing department did a job by selling kits than expected, at a sale price than expected. Sales revenue Budget per Output Unit 65,000 2.95 Output Units (Kits) 70,000 75,000 $ 191,750 $ 206,500 $ 221,250 Variable expenses: Cost of goods sold 1.20 78,000 84,000 90,000 Sales commissions 0.25 16,250 17,500 18,750 Utility expense 0.15 9,750 10,500 11,250 Fixed expenses: Salary expense 33,000 33,000 36,300 Depreciation expense 18,000 18,000 20,700 Rent expense 9,000 9,000 13,000 6,000 6,000 6,000 Utility expense Total expenses $ 170,000 $ 178,000 $196,000 $ 21,750 $ 28,500 $ 25,250 Operating income