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 very 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 wllingly 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
Results Budget Variances
Liters of blood collected 550 430
Medical supplies $10,707 $8,815 $1,892 U
Lab tests 5,994 5,762 232 U
Equipment depreciation 4,690 4,300 390 U
Rent 1,900 1,900 0
Utilities 1,056 950 106 U
Administration 13,071 12,491 580 U
Total expense $37,418 $34,218 $3,200 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 $20.50g
Lab tests $13.40g
Equipment depreciation $4,300
Rent $1,900
Utilities 950
Administration $10,900 + $3.70q
Required:
Complete the flexible budget performance report for September.