Problem 9-22 Performance Report for a Nonprofit Organization [L09-1, LO9-4, LO9-

Question

Problem 9-22 Performance Report for a Nonprofit Organization [L09-1, LO9-4, LO9-6] 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 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 780 600 $ 9,086 $ 6,930 $2,156 U 10,826 8,6402,186 U 2,010 1,800 210 U 1,800 1,800 330 14,382 14,380 364 34 U 2 U Total expense $ 38,468 $ 33,880 $4,588 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:

Explanation / Answer

Answer:

(Actual Vs Flexible) (Flexible Vs Planning) Actual Results Spending variances F/U Cost formula Flexible Budget using cost formula Activity Variances F/U Planning budget Liters of blood collected 780 q = 780 780 600 Medical supplies 9086 77 U 11.55q 9009 2079 U 6930 Lab test 10826 406 F 14.4q 11232 2592 U 8640 Equipment depreciation 2010 210 U 1800 1800 0 None 1800 Rent 1800 0 None 1800 1800 0 None 1800 Utilities 364 34 U 330 330 0 None 330 Administration 14382 322 F 13300+1.8q 14704 324 U 14380 Total expenses 38468 407 F 38875 4995 U 33880

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