Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Eastgate Blood Bank, a private charity partly supported by government grants, is located in the city of Cincinnati. The blood bank has just finished

The Eastgate Blood Bank, a private charity partly supported by government grants, is located in the city of Cincinnati. The blood bank has just finished its operations for September, which was a very busy month due to a powerful hurricane that hit neighboring islands causing many injuries. The hurricane largely bypassed Cincinnati, but residents of Cincinnati 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.

Eastgate Blood Bank Cost Control Report For the Month Ended September 30
Actual Results Planning Budget Variances
Liters of blood collected 600 480
Medical supplies $ 10,512 $ 8,640 $ 1,872 U
Lab tests 6,187 5,952 235 U
Equipment depreciation 4,165 3,800 365 U
Rent 1,650 1,650 0
Utilities 921 825 96 U
Administration 12,741 12,186 555 U
Total expense $ 36,176 $ 33,053 $ 3,123 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 $18.00q
Lab tests $12.40q
Equipment depreciation $3,800
Rent $1,650
Utilities $825
Administration $10,650 + $3.20q

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Business Strategy Audit

Authors: Vernal Della-Piana, Murray Low, Kendall Lyman

1st Edition

978-0955970740

More Books

Students also viewed these Accounting questions

Question

understand the key issues concerning international assignments

Answered: 1 week ago