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 particularly 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 govemment 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 Results pianning Varances Budget Liters of blood collected Medical supplies Lab testas Equipment depreciation Rent Utilities Administration 780 600 S 9,132S 6,990 $ 2,142U 10,726 1,370 1,300 326 14,580 B.550 1,100 1.300 300 2,176 U 270 U 26 U 180 U Total expense S 37,114 S 32,620 $ 4,794 U The managing director of the blood bank was very unhappy with his report, claim ng that his costs were higher han exp cled due to he errer enc on ha neighboring Islands. ΗΘ also ported out hal he additional cost: had been fully covered by payments from grateful recipients on the other islands. The govemment 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 ot that actual cos were a lot higher than promised in the budget. The following cost formulas were used to construct the planning budget: Cost Formulas Medical supplies Lab tests Equipment depreciation Rent Utilities S11.654 $14.26q $1.100 $1.300 $300 $1.80q Required: 1. Complete the performance report for September using the flexible budget approach. (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. Do not round intermediate calculations and round your final answers to nearest whole dollar.)

Answer 1

Answer

• All working forms part of the answer
• Requirement as asked, along with working

	Working part						Actual Results	Spending Variance		Flexible Budget	Activity variance		Planning Budget
Litres of blood collected (q)		Fixed part		Variable part Per unit	Actual units		780			780			600
		[A]		[B]	[C]					[A + (B x C)]
Medical Supplies	(	$                 -	)	$ 11.65	780		$      9,132.00	$               45.00	U	$      9,087.00	$            2,097.00	U	$             6,990.00
Lab Tests	(	$                 -	+	$ 14.25	780	)	$    10,726.00	$             389.00	F	$    11,115.00	$            2,565.00	U	$             8,550.00
Equipment depreciation	(	$    1,100.00	+	$         -	780	)	$      1,370.00	$             270.00	U	$      1,100.00	$                         -	None	$             1,100.00
Rent	(	$   1,300.00	+	$         -	780	)	$      1,300.00	$                      -	None	$      1,300.00	$                         -	None	$             1,300.00
Utilities	(	$        300.00	)		780		$          326.00	$               26.00	U	$          300.00	$                         -	None	$                300.00
Administrative	(	$ 13,300.00	+	$    1.80	780	)	$    14,560.00	$             144.00	F	$    14,704.00	$                324.00	U	$          14,380.00
Total Expenses							$    37,414.00	$             192.00	F	$    37,606.00	$          10,368.00	U	$          32,620.00