What would be the Standard Amount (SA) for Variable Overhead if, again, Fast Finance allocated Variable Overhead on the basis of Direct Labor Hours?

Actual/Normal/Standard Costing

Fast Finance is a drive-in financial consulting business, where customers park in the parking lot and employees come by on roller-skates to give them financial advice.

For the month of January, Fast Finance estimates that they will receive 900 customers. The following table summarized their budgeted costs for January:

StandardsDirect Labor Cost50 $ / hrTotal Variable Overhead Cost$11,250Total Fixed Overhead Cost$19,800Number of Customers900Total Direct Labor Hours1,125 hrs

At the end of January, Fast Finance had incurred the following actual costs:

ActualsDirect Labor Cost$48,000Total Variable Overhead Cost$9,600Total Fixed Overhead Cost$20,000Number of Customers960Total Direct Labor Hours960 hrs

Fast Finance uses a full-absorption, normal costing system, and allocates their Variable and Fixed overhead on the basis of number of customers. Fast Finance charges their customers a flat rate per session, and as a result, considers the 'units' for their costing system to be customers.