Re-Tire produces bagged mulch made from recycled tires. Production involves shredding tires and bag- Exercise 16-25 ging the pieces in the Bagging department. All direct materials enter in the Shredding process. The follow- Recording cost flows in a ing describes production operations for October. process cost system P1 P2 P3 P4 B 1 2 Direct materials used (Shredding) $ 522,000 3 Direct labor used (20% in Shredding: 80% in Bagging) $ 130,000 4 Predetermined overhead rate (based on direct labor) 175% 5 Transferred to Bagging $ 595,000 6 Transferred from Bagging to finished goods $ 580,000 The company's revenue for the month totaled $950,000 from credit sales, and its cost of goods sold for the month is $540,000. Prepare summary journal entries dated October 31 to record its October production activities for (1) direct materials usage, (2) direct labor incurred, (3) overhead applied, (4) goods transfer Check (3) Cr. Factory from Shredding to Bagging, (5) goods transfer from Bagging to finished goods, (6) credit sales, and Overhead, $227,500 (7) cost of goods sold