Posted by Nam on Friday, June 15, 2012 at 12:44pm.
The Antigua Blood Bank, a private charity partly supported by government grants, is located on the Caribbean island of Antigua. 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 Antigua, but residents of Antigua willingly donated their blood to help people on other islands. As a consequence, the blood bank collected and processed over 30% 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. (The currency on Antigua is the East Caribbean dollar.) Continued support from the government depends on the Blood Bank’s ability to demonstrate control over its costs.
Antigua Blood Bank
Cost Control Report
For the Month Ended September 30
Actual Budget Variance
Liters of blood collected 320 240 80
Medical supplies $ 4,650 $ 3,360 $ 1,290 U
Lab tests 2,800 2,760 40 U
Refreshments for donors 2,188 1,488 700 U
Administrative supplies 620 480 140 U
Total variable cost 10,258 8,088 2,170 U
Staff salaries 8,000 8,000 0
Equipment depreciation 1,400 1,000 400 U
Rent 500 500 0
Utilities 250 225 25 U
Total fixed cost 10,150 9,725 425 U
Total cost $20,408 $17,813 $2,595 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.
1. Prepare a new performance report for September using the flexible budget approach. (Note: Even though some of these costs might be classified as direct costs rather than as overhead, the flexible budget approach can still be used to prepare a flexible budget performance report.)
2. Do you think any of the variances in the report you prepared should be investigated? Why?
Answer this Question
More Related Questions
- math - Patricia donated 1 pint of blood to the blood bank. The lab assistant ...
- accounting - •The Bank Account as a control device that helps to protect cash. ...
- Math - Of 1901 people who came into a blood bank to give blood, 315 people had ...
- statistics - Of 1735 people who came into a blood bank to give blood, 373 people...
- MATH - Of 1936 people who came into a blood bank to give blood, 200 people had ...
- Economics - who knows how to measure the true cost of a pint of B-Positive blood...
- Biology - If agglutination occurs when blood with a certain antigen and blood ...
- Bank Operations Question - Say you want to start a "National Bank". Thus you ...
- math - Suppose 48% of the general population of thw world has blood type O, 27% ...
- Economics - Bank A has a leverage ratio of 10, while Bank B has a leverage ratio...