Cost Accounting Chapter 7: Direct Cost Variances Evergreen, Inc., has the set the following standards for direct materials and direct manufacturing labor for each 25-lb. bag of chemical fertilizer it produces: Per Bag Direct Materials: 31.25 pounds of XF/2000 @ $0.10 $3.125 Direct Labor: 0.0625 hours @ $40.00 per hour 2.500 The company had planned to produce 2,000,000 pounds of the fertilizer during February 2017, but manufactured 25% more fertilizer than planned, using 3,375,000 pounds of XF/2000 and 6,500 direct manufacturing labor hours. The company purchased 3,750,000 pounds of XF/2000 at $0.09375 per pound and incurred a total payroll of $227,500 for direct labor during the month. The company uses standard costing, and thus identifies all variances at time incurred (ie: time of purchase, time of use, etc.). REQUIREMENTS: (1) Compute all relevant variances for direct costs. (2) Prepare the journal entries to record the variances (assume purchases made on the 15th of the month, payroll and requisitions recorded at end of month).