Chemical Incorporated. 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 @ $0.18/pound	$ 4.50
Direct labor: 0.15 hour @ $30/hour	4.50

The firm manufactured 100,000 bags of Weed-Be-Doom in December and used 2,700,000 pounds of XF2000 and 15,345 direct labor hours. During the month, the firm purchased 3,000,000 pounds of XF2000 at $0.125 per pound and incurred a total payroll of $537,075 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.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

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

Direct materials:
Purchase-price variance	$165,000	Favorable
Usage variance	$36,000	Unfavorable
Direct labor:
Rate variance
Efficiency variance

Prepare journal entries to record the preceding events. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

• Purchased 3,000,000 pounds of XF2000 at $0.125 per pound.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
1