PROBLEM 9–22 Performance Report for a Nonprofit Organization [LO9–1, LO9–4, LO9–6] 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 caus?ing 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. Cost Control Report For the Month Ended September 30 Actual Results Planning Budget Variances Liters of blood collected . . . 620 500 Medical supplies . . . . . . . . . $ 9,250 $ 7,500 $1,750 U Lab tests . . . . . . . . . . . . . . . 6,180 6,000 180 U Equipment depreciation . . . 2,800 2,500 300 U Rent . . . . . . . . . . . . . . . . . . . 1,000 1,000 0 Utilities . . . . . . . . . . . . . . . . . 570 500 70 U Administration . . . . . . . . . . . 11,740 11,250 490 U Total expense . . . . . . . . . . . $31,540 $28,750 $2,790 U Cost Formulas Medical supplies . . . . . . . . . . . . . . . . $15.00 q Lab tests . . . . . . . . . . . . . . . . . . . . . . $12.00 q Equipment depreciation . . . . . . . . . . $2,500 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000 Utilities . . . . . . . . . . . . . . . . . . . . . . . . $500 Administration . . . . . . . . . . . . . . . . . . $10,000 1 $2.50 q 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:After receiving a copy of this cost report, the supervisor of the Assembly Department stated, “These reports are super. It makes me feel really good to see how well things are going in my department. I can’t understand why those people upstairs complain so much about the reports.” For the last several years, the company’s marketing department has chronically failed to meet the sales goals expressed in the company’s monthly budgets. Required: 1. The company’s president is uneasy about the cost reports and would like you to evaluate their usefulness to the company. 2. What changes, if any, should be made in the reports to give better insight into how well depart?mental supervisors are controlling costs? 3. Prepare a new performance report for the quarter, incorporating any changes you suggested in question (2) above. 4. How well were costs controlled in the Assembly Department in March?