Rick kleckner corporation recorded a right-of-use asset for $300,000 as a result of a finance lease on december 31, 2016. kleckner’s incremental borrowing rate is 8%, and the implicit rate of the lessor was not known at the commencement of the lease. kleckner made the first lease payment of $48,337 on on december 31, 2016. the lease requires 8 annual payments. the equipment has a useful life of 8 years with no residual value.

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.