10-20The 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 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 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. (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 their costs.St. Lucia Blood BankCost Control ReportFor the Month Ended September 30Actual Budget VarianceLiters of blood collected        620        500      120Variable costs:Medical supplies $9,250 $  7,500 $1,750 ULab Tests61806000180Equipment depreciation28002500300Rent100010000Utilities57050070Administration1174011250490Total expense31540287502790The 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.Required: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? 7-11Question DetailsDuring Heaton Company's first two years of operations, the company reported absorption costing net operating income as follows:Year 1 Year 2Sales (@ $25 per unit)................................... $1,000,000 $1,250,000Cost of goods sold (@ $18 per unit)................... 720,000 900,000Gross Margin.............................................. 280,000 350,000Selling and administrative expenses.................. 210,000 230,000Net operating income.................................. 70,000 120,000$2.00 per unit variable: $130,000 fixed each yearThe company's $18 unit product cost is computed as follows:Direct Materials...............................................................$4Direct Labor...................................................................$7Variable Manufacturing Overhead..........................................$1Fixed Manufac.

1. 10-20The 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 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 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. (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 their costs.St. Lucia Blood BankCost Control
ReportFor the Month Ended September 30Actual Budget
VarianceLiters of blood collected 620 500
120Variable costs:Medical supplies $9,250 $ 7,500 $1,750
ULab Tests61806000180Equipment
depreciation28002500300Rent100010000Utilities57050070Adm
inistration1174011250490Total expense31540287502790The
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.Required: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

2. performance report.)2. Do you think any of the variances in the
report you prepared should be investigated? Why?
7-11Question DetailsDuring Heaton Company's first two years
of operations, the company reported absorption costing net
operating income as follows:Year 1 Year 2Sales (@ $25 per
unit)................................... $1,000,000 $1,250,000Cost of
goods sold (@ $18 per unit)................... 720,000 900,000Gross
Margin.............................................. 280,000 350,000Selling
and administrative expenses.................. 210,000 230,000Net
operating income.................................. 70,000 120,000$2.00
per unit variable: $130,000 fixed each yearThe company's $18
unit product cost is computed as follows:Direct
Materials...............................................................$4Direct
Labor...................................................................$7Variable
Manufacturing Overhead..........................................$1Fixed
Manufacturing
Overhead.............................................$6Absorption costing
unit product cost......................................$18Forty percent of
fixed manufacturing overhead consists of wages and salaries;
the remainder consists of depreciation charges on production
equipment and buildings. Production and cost data for the two
years are:Year 1 Year 2Units
produced................................................. 45,000 45,000Units
Sold....................................................... 40,000 50,0001.
Prepare a variable costing contribution format income statement
for each year.2. Reconcile the absorption costing and the
variable costing net operating income figures for each year.
6-18Olongapo Sports Corporation is the distributor in the
Philippines of two premium golf balls�the Flight
Dynamic and the Sure Shot. Monthly sales, expressed in pesos
(P), and the contribution margin ratios for the two products
follow:ProductFlight Dynamic Sure Shot TotalSales P 150,000
P 250,000 P 400,000CM ratio 80% 36% ?Fixed expenses total
P183,750 per month.Requirement 1:Prepare a contribution
format income statement for the company as a whole. (Round
your percentage values to one decimal place, e.g., .1234 as 12.3.

3. 2Computer the breakeven point for the company based on the
current sales mix. 3If sales increase by p100,000 a month, by
how much would you expect net operating income to increase.
What are your assumptions.