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:

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.