The St. Lucia Blood Bank, a private charity partly supported by government grant

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 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 610 490 Medical supplies Lab tests Equipment depreciation Rent Utilities Administration 10,437 8,575 1,862 U 235 U 360 U 5,978 3,700 1,600 800 12,669 12,119 6,213 4,060 1,600 894 94 U 550 U S35,873 32,772 3,101 U 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 The following cost formulas were used to construct the planning budget Cost Formulas Medical supplies Lab tests Equipment depreciation Rent Utilities Administration $17.50g $12.20g $3,700 $1,600 $800 10,600 $3.10g 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 Planning Actual Results Flexible Budget Liters of blood collected 610 490 Medical supplies Lab tests Equipment depreciation Rent Utilities Administration Total expense $ 10,437 6,213 4,060 1,600 894 12,669 $35,873 $ 8,575 5,978 3.700 1,600 800 12,119 $ 32,772

Explanation / Answer

Actual results Spending variances Flexible budget Activity variances Planning budget Liters of blood collected 610 610 490 Medical supplies 10437 238 F 10675 2100 U 8575 Lab tests 6213 1229 F 7442 1464 U 5978 Equipment depreciation 4060 360 U 3700 0 None 3700 Rent 1600 0 None 1600 0 None 1600 Utilities 894 94 U 800 0 None 800 Administration 12669 178 U 12491 372 U 12119 Total expense 35873 835 F 36708 3936 U 32772

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