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1. What is the Standard Amount (SA) for Variable Overhead (and Fixed Overhead, incidentally)? a: 1 customer / customer b: 1 unit / unit, where
1. What is the Standard Amount (SA) for Variable Overhead (and Fixed Overhead, incidentally)?
a: 1 customer / customer
b: 1 unit / unit, where customers are the 'units'
c: 1 cust. / cust.
d: I get it, it's 1 customer / customer
2a. What is the Standard Price (SP) of Variable Overhead?
2b. What is the Standard Price (SP) of Fixed Overhead?
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: Standards Direct Labor Cost 50 $/hr Total Variable Overhead Cost $11,250 Total Fixed Overhead Cost $19,800 Number of Customers 900 Total Direct Labor Hours 1,125 hrs At the end of January, Fast Finance had incurred the following actual costs: Actuals Direct Labor Cost $48,000 Total Variable Overhead Cost $9.600 Total Fixed Overhead Cost $20,000 Number of Customers 960 Total Direct Labor Hours 960 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
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