Powderhouse,Inc

question 14

Essay

Powderhouse,Inc.has two processes-Coloring Department and Mixing Department.The company sold 2,000 gallons of paint for $220,000,of which $150,000 was sold on account.The total cost of processing was $385,000 for 5,500 gallons of paint.What are the journal entries to record a sale if the company follows a process costing system?

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Definitions:

Price Discriminate

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on the willingness to pay of different market segments.

Resale

The act of selling a product or service again, often used goods, to another buyer.

Perfectly Price Discriminate

A pricing strategy where a seller charges the maximum possible price for each unit consumed that each buyer is willing to pay, thus capturing the entire consumer surplus.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service versus what they actually pay.