Levie Company uses standard costing. The company prepared its static budget for 2015 at 2,500,000 machine-hours for the year. Total budgeted overhead cost is $31,250,000. The variable overhead rate is $10 per machine-hour ($20 per unit). Actual results for 2015 follow:

Machine-hours..................2,400,000 hours

Output.............................1,245,000 units

Variable overhead...................$25,200,000

Fixed overhead rate variance....$ 1,500,000 U

Required

1. Calculate for the fixed overhead:

a. Budgeted amount.

b. Budgeted cost per machine-hour.

c. Actual cost.

d. Production-volume variance.

2. Calculate the variable overhead rate variance and the variable overhead efficiency variance.

3. Angela Remich, the controller, prepares the variance analysis. It is common knowledge in the company that she and Ronald Monroe, the production manager, are not on the best of terms. In a recent executive committee meeting, Monroe had complained about the lack of usefulness of the accounting reports he receives. To get back at him, Remich manipulated the actual fixed overhead amount by assigning a greater-than-normal share of allocated costs to the production area. And, she decided to amortize all of the newly acquired production equipment using the double-declining-balance method rather than the straight-line method, contrary to company practice. As a result, there was a sizable unfavourable fixed overhead rate variance. She boasted to one of her confidants, "I am just returning the favour." Discuss Remich's actions and their ramifications.