The St. Lucia Blood Bank, a private charity partly supported by government grant

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 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 bank's ability to demonstrate control over its costs. St. Lucia Blood Bank Cost Control Report For the Month Ended September 38 Actual Planning ResultsBudget Variances Liters of blood collected Medical supplies Lab tests 588 $ 9,258 7,588 1,758 U 6,808 2,588 1,808 6,188 2,888 1,808 578 11,748 188 U 388 U Rent Utilities dministration 78 U 498 U 588 11,258 Total expense 31,548 28,758 $ 2,798 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 Lab tests Equipment depreciation Rent Utilities Administration $15.88q $12.88q $2,58e $1,880 586 $1,88$2.58q Requlrec: 1.Complete the flexible budget performance report for September. (Indicate the effect of each varlence by selecting "F" for favorable, "U" for unfavorable, and "N ne" for no effect (Le., zero variance). Input all amounts ag p?sltlve values.) Blood Flexible Budget Performance Report For the Month Ended September 30 Flexible Actual Liters of blood collected (q) 500 S 9,250 6.180 2,800 1,000 570 11,740 S 31,540 S 7,500 6,000 2,500 1,000 500 11,250 S 28,750 Medical supplies Lab tests Rent Utilities Total expense

Explanation / Answer

Actual results Spending variances Flexible budget Activity variances Planning budget Liters of blood collected 620 620 500 Medical supplies 9250 50 F 9300 1800 U 7500 Lab tests 6180 1260 F 7440 1440 U 6000 Equipment depreciation 2800 300 U 2500 0 None 2500 Rent 1000 0 None 1000 0 None 1000 Utilities 570 70 U 500 0 None 500 Administration 11740 190 U 11550 300 U 11250 Total expenses 31540 750 F 32290 3540 U 28750

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