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$8-48.$ OVERHEAD VARIANCES, ETHICS. Butler Company uses standard costing. The company has a manufacturing plant in Portland, Oregon. Firm management has always used variance analysis as a performance measure for the plant.John Mack has just been hired as a new controller for Butler Company. John is good friends with the Portland plant manager and wants him to get a favorable review. To help him out, John underestimates production, and budgets annual output of $800,000$ units for $2020.$ His explanation for this is that the economy is slowing and sales are likely to decrease. Budgeted and actual costs for $2020$ are as follows: The table depicts actual results and static$-$budget amounts for six metrics related to manufacturing costs. The details of the table are as follows:Units produced and soldActual results: $1,000,000$Static$-$budget amounts: $800,000$Direct manufacturing labor$-$hours per unitActual results: NoneStatic$-$budget amounts: $0\mathrm{.}5$ labor$-$hourDirect manufacturing labor$-$hoursActual results: $510,000$Static$-$budget amounts: NoneVariable overhead rateActual results: $3\mathrm{.}50$ dollars per labor$-$hourStatic$-$budget amounts: NoneVariable overhead costsActual results: $1,800,000$ dollarsStatic$-$budget amounts: NoneFixed overhead costsActual results: $1,240,000$ dollarsStatic$-$budget amounts: $1,200,000$ dollars $321$Required$1.$ Compute the budgeted fixed cost per labor$-$hour for the fixed overhead$\mathrm{.}2.$ Compute the variable overhead spending variance and the variable overhead efficiency variance$\mathrm{.}3.$ Compute the fixed overhead spending and volume variances$\mathrm{.}4.$ Compute the budgeted fixed cost per labor$-$hour for the fixed overhead if John Mack had estimated production more realistically at the expected sales level of $1,000,000$ units$\mathrm{.}5.$ Summarize the fixed overhead variance based on both the projected level of production of $800,000$ units and $1,000,000$ units$\mathrm{.}6.$ Did John Mack$$s attempt to make his friend, the plant manager, look better work? Why or why not?

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