Question

The St. Lucia Blood Bank, a private charity partly supported by government grants, is located on the Caribbean island of St. Lucia. The blood bank has just finished its operations for September, which was a very busy month due to a powerful hurricane that hit neighboring islands causing many injuries. The hurricane largely bypassed St. Lucia, but residents of St. Lucia willingly donated their blood to help people on other islands. As a consequence, the blood bank collected and processed over 20% more blood than had been originally planned for the month. A report prepared by a government official comparing actual costs to budgeted costs for the blood bank appears below. Continued support from the government depends on the blood bank's ability to demonstrate control over its costs. St. Lucia Blood Bank Cost Control Report For the Month Ended September 30 Actual Planning Results Budget Liters of blood collected 580 460 Medical supplies Lab tests Equipment depreciation Rent Utilities Administration Total expense $ 7,590 5,060 3,220 1,200 678 11,768 $ 29,516 $ 6,210 4,876 2,900 1,200 600 11,258 $ 27,044 $ 1,380 U 184 U 320 U 0 78 U 510 U $ 2,472 U The managing director of the blood bank was very unhappy with this report, claiming that his costs were higher than expected due to the emergency on the neighboring islands. He also pointed out that the additional costs had been fully covered by payments from grateful recipients on the other islands. The government official who prepared the report countered that all of the figures had been submitted by the blood bank to the government; he was just pointing out that actual costs were a lot higher than promised in the budget. The following cost formulas were used to construct the planning budget: Medical supplies Lab tests Equipment depreciation Rent Utilities Administration Cost Formulas $13.50 $10.609 $2,900 $1,200 $600 $10,200 + $2.309 Required: 1. Complete the flexible budget performance report for September. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Answer 1

Flexible budget performance report

	Actual	Spending variance	Flexible budget	Activity variance	Planning budget
Liters of blood collected	580		580		460
Medical supplies	7590	240 F	7830	1620 U	6210
Lab test	5060	1088 F	6148	1272 U	4876
Equipment Depreciation	3220	320 U	2900	0 None	2900
Rent	1200	0 None	1200	0 None	1200
Utilities	678	78 U	600	0 None	600
Administration	11768	234 U	11534	276 U	11258
Total expense	29516	696 F	30212	3168 U	27044