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 128,000 units requiring 512,000 direct labor hours. (practical capacity is 532,000 hours.) annual budgeted overhead costs total $844,800, of which $609,280 is fixed overhead. a total of 119,000 units using 510,000 direct labor hours were produced during the year. actual variable overhead costs for the year were $260,500, and actual fixed overhead costs were $555,350. required: 1. compute the fixed overhead spending and volume variances. 2. compute the variable overhead spending and efficiency variances. do not round intermediate calculations

You receive a memo from the vice president of procurement responding to your query. he writes: “it will be very important to maintain product continuity. we have a large base of devoted customers. we want to make sure that the quality and key characteristics of island knight stay the same through this transition. talk to frank, our consulting professional perfumer, for more information about the cologne. seasonal variations in costs are the single most significant factor in our deciding to go with another supplier, so finding a way to limit that should be the top priority. the overall marginal costs and shipping costs are probably somewhat less significant. you may want to talk to cindy, the product manager for island knight, regarding pricing information about the product.” what is the best action to take next?