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 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. (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.)

Answer 1

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	A	B		C=A+B	D=E-C or C-E		E
	Planning Budget	Activity Variance	U/F	Flexible Budget	Spending Variance	U/F	Actual Results
	(Given)	(570-450)*per unit					(Given)
Liters of blood collected (q)	450			570			570
Medicle Supplies (14q)	6300	1680	U	7980	285	F	7695
Lab Tests (10.80q)	4860	1296	U	6156	1111	F	5045
Equipment Dep 3000	3000	0		3000	325	U	3325
Rent 1250	1250	0		1250	0		1250
Utilities 625	625	0		625	80	U	705
Administration 10250+2.4q	11330	288	U	11618	227	U	11845
Total Expense	27365	3264	U	30629	764	F	29865