Chemical Inc. has set the following standards for direct materials and direct labor for each 20-pound bag of Weed-Be-Doom:

	Per Bag
Direct materials: 25 pounds XF2000 @ $0.22/pound	$	5.50
Direct labor: 0.19 hour @ $30/hour		5.70

The firm manufactured 100,000 bags of Weed-Be-Doom in December and used 2,700,000 pounds of XF2000 and 19,385 direct labor hours. During the month, the firm purchased 3,000,000 pounds of XF2000 at $0.145 per pound and incurred a total payroll of $678,475 for direct labor. The firm records purchases at standard cost and therefore recognizes the direct materials price variance at point of purchase.

Required:

1. Compute the price and usage variances for direct materials and the rate and efficiency variances for direct labor.

2. Prepare journal entries to record the preceding events.