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KOALA MEDICAL LABORATORY Cost Control Report For the Month Ended April 30 Static Budget Variance 210.00 Static Budget 710.00 Actual 920.00 Laboratory samples collected Variable costs: Medical supplies Lab tests Refreshments for staff and volunteers Administrative supplies $14,880.00 16, 217.00 1,824.00 283.00 $10,792.00 13,135.00 1,491.00 497.00 $4,088.00 3,082.00 333.00 (214.00) Total variable cost 33,204.00 25,915.00 7,289.00 Fixed costs: Staff salaries Equipment depreciation Rent Utilities 19,900.00 3,162.00 2,300.00 492.00 19,900.00 2,860.00 2,300.00 455.00 302.00 0 37.00 Total fixed cost 25,854.00 25,515.00 339.00 Total cost $59,058.00 $51,430.00 $7,628.00 The managing director of the medical laboratory is very unhappy with this report, claiming that his costs were higher than expected due to the emergency on the neighbouring islands. He also points out that the additional costs were fully covered by payments from grateful recipients of the other towns. The government official who prepared the report counters that all of the figures were submitted by the medical laboratory to the government; he was just pointing out that actual costs were considerably higher than promised in the budget. Required: 1. Explain what is wrong with the report from the government agent. Why are all the variances unfavourable? 2. Prepare a new performance report for September using the flexible budget approach. (Note: Even though there are no revenues in this setting, the flexible budget approach can still be used to prepare a flexible budget performance report. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance). Round your answers to 2 decimal places.) Centrico Medical Laboratory Flexible Budget Performance Report For the Month Ended September 30 Costs Actual Costs Cost Formula Incurred for (per unit) 920 Lab samples Flexible Budget Based on 920 Lab samples Flexible Budget Variance Variable costs: Medical supplies Lab tests Refreshments for staff and volunteers Administrative supplies Total variable cost Fixed costs: Staff salaries Equipment depreciation Rent Utilities Total fixed cost Total cost

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