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 humicane 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 govemment 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. St. Lucia Blood Bank Cost Control Report For the Month Ended September 30 Planning Budget Actual Results Variances Liters of blood collected Medical supplies Lab tests Equipment depreciation Rent Utilities Administration 600 $ 9,288 7,140 $2,148 U 8,700 1,100 1,500 280 13,520 780 2,170 U 240 U 10,870 1,340 1,500 304 13,680 $36,982 24 U 160 U 32,240 $ 4,742 U Total expense 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 govenment; 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 $11.90q $14.50q $1,100 $1,500 $280 $12,500 $1.70q Medical supplies Lab tests Equipment depreciation Rent Utilities Administration 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. Do not round intermediate calculations and round your final answers to nearest whole dollar.) St. Lucia Blood Bank Flexible Budget Performance Report For the Month Ended September 30 Flexible Budget Actual Results Planning Budget Spending Variances Activity Variances $9,288 10,870 1,340 1,500 304 13,680 $ 36,982 $ 7,140 8,700 1,100 1,500 280 13,520 $ 32,240 Medical supplies Lab tests Equipment depreciation Rent Utilities Administration Total expense Exchange Corp. is a company that acts as a facilitator in tax-favored real estate swaps. Such swaps, know as 1031 exchanges, permit participants to avoid some or all of the capital gains taxes that would otherwise be due. The bookkeeper for the company has been asked to prepare a report for the company to help its owner/manager analyze performance. The first such report appears below: Analysis of Revenues and Costs For the Month Ended May 31 Planning Budget Unit Unit Revenues Revenues and Costs and Costs Variances Exchanges completed Revenue $610 $690 $80 U Legal and search fees Office expenses Equipment depreciation Rent 245 165 25 75 20 U 86 F 5 F 3 F 89 F Total expense 525 $ 85 614 $ 76 Note that the revenues and costs in the above report are unit revenues and costs. For example, the average office expense is $251 per exchange completed on the planning budget whereas, the average actual office expense is $165 per exchange completed. Legal and search fees is a variable cost, office expenses is a mixed cost; and equipment depreciation, rent, and insurance are fixed costs. In the planning budget, the fixed component of office expenses was $4,950 All of the company's revenues come from fees collected when an exchange is completed Required 1. Is the report prepared by the bookkeeper useful as a performance report? Yes No 2. Complete a performance report that would help the ownermanager assess the performance of the company in May. (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.) Exchange Corp Flexible Budget Performance Report For the Month Ended May 31 Revenue and Spending Variances Flexible Budget Planning Actual Results Activity Variances Bud Exchanges completed Revenue Expenses: 30 25 Legal and search fees Office expenses Equipment depreciation Rent Insurance Total expense Net operating income