DIRECTIONS: Read through each scenario and determine if the business uses a production concept, sales concept, or marketing concept.
1. "We're very focused on understanding our customers and meeting their needs. And you
have to be. For example, 50 years ago our firm used to manufacture typewriters - well
nobody buys them anymore. Therefore, to be successful you have to adapt and meet
changing consumer needs and, fortunately, our firm is committed to that goal. And it's
working, last year we achieved both record profits and record customer satisfaction
scores."
Concept
Justification

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.