Dowell Company produces a single product. Its income statements under absorption costing for its first two years of
operation follow.
Sales ($46 per unit)
Cost of goods sold ($31 per unit)
Gross margin
Selling and administrative expenses
Net income
2016
2017
$966,000 $1,886,000
651,000 1,271,000
315,000 615,000
292,250 337,250
$ 22,750 $ 277,750
Additional Information
a. Sales and production data for these first two years follow.

Oerstman, inc. uses a standard costing system and develops its overhead rates from the current annual budget.the budget is based on an expected annual output of 120,000 units requiring 480,000 direct labor hours.(practical capacity is 500,000 hours)annual budgeted overhead costs total $772,800, of which $556,800 is fixed overhead.a total of 119,300 units, using 478,000 direct labor hours, were produced during the year.actual variable overhead costs for the year were $260,400 and actual fixed overhead costs were $555,450.required: 1. compute the fixed overhead spending variance and indicate if favorable or unfavorable.2. compute the fixed overhead volume variance and indicate if favorable or unfavorable.