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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
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 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.
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:
Required:
Complete the flexible budget performance report for September. Indicate the effect
of each variance by selecting for favorable, U for unfavorable, and "None" for
no effect ie zero variance Input all amounts as positive values.
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