The St. Lucia Blood Bank, a private charity partly supported by government grant
ID: 2448875 • Letter: T
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.
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:
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.)
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.
Explanation / Answer
St. Lucia Blood Bank Cost Control Report For the Month Ended September 30 Actual Results Flexible Budget Planning Budget Rate Variance Volume Variance Liters of blood collected 780 780 600 Medical supplies 9232 9204 7080 28 U 2124 U Lab tests 10792 11193 8610 401 F 2583 U Equipment depreciation 1370 1100 1100 270 U 0 Rent 1500 1500 1500 0 0 Utilities 328 300 300 28 U 0 Administration 13630 13748 13460 118 F 288 U 4995 U Total expense 36852 37045 32050 193 F -4995 Rate Variance = Flexible budget - Actual result Volume Variance = Planning Budget - Flexible budget
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