Question

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 Variances Liters of blood 590 470 collected Medical supplies $ 7,473 $ 6,110 $1,363 U Lab tests 5,071 4,888 183 U Equipment 3,115 2,800 315 U depreciation Rent 1,150 1,150 0 Utilities 651 575 76 U Administration 11,689 11,184 505 U Total expense $29,149 $26,707 $2,442 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 $13.009 $10.409 $2,800 $1,150 $575 $10, 150 + $2.209 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.) St. Lucia Blood Bank Flexible Budget Performance Report For the Month Ended September 30 Actual Flexible Results Budget 590 Planning Budget 470 Liters of blood collected $ 6,110 4.888 Medical supplies Lab tests Equipment depreciation Rent Utilities Administration $ 7,473| 5,071 3,115 1,150 651 11,689 2,800 1,150 575 11,184 Total expense $26,707 29,149

Answer 1

			Flexible buget
liters of blood collected					590
			Variable	fixed
medical supplies			13		7670
lab tents			10.4		6136
Equipment depreciation				2,800	2,800
Rent				1,150	1,150
Utilities				575	575
Administration			2.2	10150	11448
total expense			25.6	14675	29779
	Flexible budget = fixed component + actual 590 liters*variable component)
				Flexible Budget Performance Report
		Actual	spending variance		Flexible	Activity variance		planned budget
		resutl			budget
liters of blood collected		590			590			470
Medical supplies		7,473	197	F	7670	1,560	U	6,110
labt tests		5,071	1,065	F	6136	1,248	U	4,888
Equipment depreciation		3,115	315	U	2,800	0	N	2,800
Rent		1,150	0	N	1,150	0	N	1,150
Utilities		651	76	U	575	0	N	575
Administration		11,689	241	U	11448	264	U	11,184
total expense		29,149	630	F	29779	3,072	U	26,707