Question

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 30
	Actual Results		Planning Budget		Variances
Liters of blood collected		570		450
Medical supplies	$	7,695	$	6,300	$	1,395	U
Lab tests		5,045		4,860		185	U
Equipment depreciation		3,325		3,000		325	U
Rent		1,250		1,250		0
Utilities		705		625		80	U
Administration		11,845		11,330		515	U
Total expense	$	29,865	$	27,365	$	2,500	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	$14.00q
Lab tests	$10.80q
Equipment depreciation	$3,000
Rent	$1,250
Utilities	$625
Administration	$10,250 + $2.40q

  
Required:

1.Complete the flexible budget performance report for September.

Answer 1

Solution: