Problem 9-22 Performance Report for a Nonprofit Organization [LO9-1, 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 banks ability to demonstrate control over its costs.

St. Lucia Blood Bank Cost Control Report For the Month Ended September 30
	Actual Results		Planning Budget		Variances
Liters of blood collected		620		500
Medical supplies	$	9,250	$	7,500	$	1,750	U
Lab tests		6,180		6,000		180	U
Equipment depreciation		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 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:

	Cost Formulas
Medical supplies	$15.00q
Lab tests	$12.00q
Equipment depreciation	$2,500
Rent	$1,000
Utilities	$500
Administration	$10,000 + $2.50q

Required:

1.

Complete the performance report for September using the flexible budget approach. (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
	Actual Results	Spending Variances		Flexible Budget	Activity Variances		Planning Budget
Medical supplies	$9,250						$7,500
Lab tests	6,180						6,000
Equipment depreciation	2,800						2,500
Rent	1,000						1,000
Utilities	570						500
Administration	11,740						11,250
Total expense	$31,540			$0			$28,750

References

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