Question
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
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 Lu is ood ean pta e chart, partr supported by 20 enment grats is e ed 2n ?Co toen aand of St. Luc??The bicod bark has st nis s o ent ons fbr es eo ember, which otul tr b sy mont due oo es powerful h nene that ht ne boring ale cis r eny i unes Then micane oge Luka b t esdens or 91 Luk by possec 1 art 3 20 17D U 1720 5 703 120 na e2ig diec or or the b20d ba k es ery urh02 y at clei ing that his co s epo t were Ngrer rar e er ec cue to the energency on the ne ho ng sass. He als po led utte: te ? dtone costs oc been covered by paymen s tem meu et le ts on e ? er s nds. The emmerecn ial wha pe e eoo courtered rat al of te ec es hod RequiredStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started