actual results
spending
variances
flexible budget
acivity
variances
planning budget
medical supplies
9,250
7,500
lab tests
6,180
6,000
equipment depreciation
2,800
2,500
rent
1000
1,000
utitlities
570
500
Administration
11,740
11,250
Total Expense
31,540
28,750
The St. Lucia Blood Bank, a private charity partly supported bygovernment 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 hurricanethat hit neighboring islands causing many injuries. The hurricanelargely bypassed St. Lucia, but residents of St. Lucia willinglydonated their blood to help people on other islands. As aconsequence, the blood bank collected and processed over 20% moreblood than had been originally planned for the month.
A report prepared by agovernment official comparing actual costs to budgeted costs forthe blood bank appears below. Continued support from the governmentdepends on the blood bank’s ability to demonstrate control over itscosts.
St. Lucia Blood BankCost Control ReportFor the Month Ended September 30
Actual Results
Planning Budget
Variances
Liters of bloodcollected
620
500
Medicalsupplies
$
9,250
$
7,500
$
1,750
U
Lab tests
6,180
6,000
180
U
Equipmentdepreciation
2,800
2,500
300
U
Rent
1,000
1,000
0
Utilities
570
500
70
U
Administration
11,740
11,250
490
U
Total expense
$
31,540
$
28,750
$
2,790
U
The managing director of the bloodbank was very unhappy with this report, claiming that his costswere higher than expected due to the emergency on the neighboringislands. He also pointed out that the additional costs had beenfully covered by payments from grateful recipients on the otherislands. The government official who prepared the report counteredthat all of the figures had been submitted by the blood bank to thegovernment; he was just pointing out that actual costs were a lothigher than promised in the budget.
The following cost formulas wereused to construct the planning budget:
CostFormulas
Medicalsupplies
$15.00q
Lab tests
$12.00q
Equipmentdepreciation
$2,500
Rent
$1,000
Utilities
$500
Administration
$10,000 +$2.50q
Required:
1.
Complete the performance report for September using the flexiblebudget approach. (Indicate the effect of each variance byselecting “F” for favorable, “U” for unfavorable, and “None” for noeffect (i.e., zero variance). Input all amounts as positivevalues.)
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