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 Variances Liters of blood collected Medical supplies Lab tests Equipment depreciation Rent Utilities Administration 620 500 $ 9,250 7,500 $1,750 U 6,180 2,800 1,000 570 6,000 2,500 1,000 500 180 U 300U 70 U 490 U 31,540 28,750 $2,790 U 1174011,250 Total expense 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.

Answer 1

Flexible budget performance report :

	Actual results	Spending variance	Flexible budget	Activity variance	Static budget
Liters of blood collected	620		620		500
Medical supplies	9250	50 F	9300	1800 U	7500
Lab tests	6180	1260 F	7440	1440 U	6000
Equipment depreciation	2800	300 U	2500	0 None	2500
Rent	1000	0 None	1000	0 None	1000
Utilities	570	70 U	500	0 None	500
Administration	11740	190 U	11550	300 U	11250
Total expense	31540	750 F	32290	3540 U	28750