The KGV Blood Bank, a private charity partly supported by government grants, is

Question

The KGV 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 is given below. (The currency on St. Lucia is the East Caribbean dollar.) Continued support from the government depends on the blood bank's ability to demonstrate control over its costs. 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: Complete the performance report for September using the flexible budget approach.

Explanation / Answer

Cost Formula Planned Budget for 800 litres blood Flexible Budget for 980 litres blood Actual result for 980 litres blood Revenue /Spending Variance (Flexible Budget - Actual) Favourable/Unfaourable Activity Variance(Planned budget -Flexible Budget) Favourable/Unfaourable $ $ $ Expenses: Medical supplies $11.60 q 9280 11368 11422 -54 U -2088 U Lab Tests $14.35q 11480 14063 13652 411 F -2583 U Equipment Depreciation $1100 1100 1100 1300 -200 U 0 N Rent $1400 1400 1400 1400 0 N 0 N Utilities $300 300 300 324 -24 U 0 N Administration $13100 + $1.80q 14540 14864 14805 59 F -324 U Total 38100 43095 42903 192 F -4995 U

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