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 Planning Budget Variances $ $ 2,142 U 2,172 U 280 U Liters of blood collected Medical supplies Lab tests Equipment depreciation Rent Utilities Administration Total expense 880 $ 10,297 12,182 1.380 1,100 332 14,040 $ 39,331 700 8,155 10,010 1,100 1,100 300 13,890 34,555 0 32 U 150_U 4,776 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: Medical supplies Lab tests Equipment depreciation Rent Utilities Administration Cost Formulas $11.657 $14.304 $1,100 $1,100 $300 $12,700 + $1.709

Answer 1

ST. LUCIA BLOOD BANK
FLEXIBLE BUDGET PERFORMANCE REPORT
FOR THE MONTH ENDED SEPTEMBER 30
	Actual results ( 880 liters)	spending variance		Flexible budget (880 liters)	Actual variance		Planning budget ( 700 liters)
Medical supplies	$ 10,297	$ 45 {10,252 -10,297}	U	$ 10,252 { 880 lts *$ 11.65 q}	$ 2,097{8,155 -10,252}	U	$ 8,155
Lab tests	$ 12,182	$ 402 {12,584 -12,182}	F	$ 12,584 {880 lts* $ 14.30q}	$ 2,574 {10,010 -12,584}	U	$ 10,010
Equipment depreciation	$ 1,380	$ 280 {1100 - 1380 }	U	$ 1100	$ 0		$ 1,100
Rent	$ 1,100	$ 0		$ 1100	$ 0		$ 1100
Utilities	$ 332	$ 32 {300 - 332 }	U	$ 300	$ 0		$ 300
Administration	$ 14,040	$ 156 {14,196 -14,040 }	F	$ 14,196 {880 lts*1.70q+12,700}	$ 306 {13,890 -14,196 }	U	$ 13,890
Total expenses	$ 39,331	$ 201	F	$ 39,532	$ 4,977	U	$ 34,555