Details of this Paper

KGV Blood Bank_Flexible Budget

Description

solution


Question

Question;The KGV 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 about 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. (The currency on St. Lucia is;the East Caribbean dollar.) Continued support from the government depends on;the blood bank?s ability to demonstrate control over its costs.;KGV Blood Bank;Cost Control Report;For the Month Ended September 30;Planning Budget;Actual Results;Variances;Liters of blood collected..;600;780;Medical supplies........;$7,110;$9,252;$2,142;U;Lab tests..............;8,610;10,782;2,172;U;Equipment depreciation..;1,900;2,100;200;U;Rent.................;1,500;1,500;0;Utilities...............;300;324;24;U;Administration.........;14,310;14,575;265;U;Total expense..........;$33,730;$38,533;$4,803;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............;$11.85q;Lab tests...................;$14.35q;Equipment depreciation.......;$1,900;Rent......................;$1,500;Utilities....................;$300;Administration..............;$13,200 + $1.85q;Required;1. Prepare a new performance report for September using the flexible;budget approach.;2. Do you think any of the variances in the report you prepared should;be investigated? Why?

 

Paper#37197 | Written in 18-Jul-2015

Price : $22
SiteLock