The Saint Lucia Blood Bank, a private charity partly supported by government grants, is located on the Caribbean island of Saint Lucia. 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 Saint Lucia, but residents of Saint 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.

ACTUAL:

Liters of Blood Collected 560

Medical Supplies $7,788

Lab Test $5,025

Equipment Department $3,430

Rent $1,300

Utilities $732

Admin $11,920

Total: $30,195

PLANNING BUDGET:

Liters of Blood Collected 440

Medical Supplies $6,380

Lab Test $4,840

Equipment Department $3,100

Rent $1,300

Utilities $650

Admin $11,40

Total: $27,670

VARIANCES:

Medical Supplies $1,408 U

Lab Tests $185 U

Equipment Depreciation $330 U

Rent $0

Utilities $82 U

ADMIN 520 U

Total $2,525 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:

Medical Supplies $14.50

Lab Tests $11.00q

Equip Depreciation $3,100

Rent $1,300

Utilities $650

Admin $10,300 + $2.50q

Please show explanations for calculations. Thank you much!

Rigcrured