During the year, Thompson Plastics was in negotiation with the local union over wages. A settlement was finally reached, and the average wage per hour was increased to $\$ 3.28$. Production fell to 145,000 units, and 220,000 hours were incurred. Standard production has been set at 150,000 units; 1.5 hours of labor were expected to produce one unit at a standard cost of $\$ 4.875$ per unit. Actual labor cost for the period was $\$ 721,600$.

1. Calculate the labor variances at Thompson Plastics.

2. Prepare the journal entry to enter labor costs in Work-in-Process Inventory, and set up the spending and efficiency variances for labor.

3. Interpretive Question: Are these variances significant in the light of the new wage agreement?