Use the Following Information to Answer the Question(s)below

question 8

Multiple Choice

Use the following information to answer the question(s) below.
Pascoe Corporation paid $450,000 for a 90% interest in Sarabet Corporation on January 1,2011,when Sarabet's stockholders' equity consisted of $250,000 Common Stock and $50,000 Retained Earnings.The book values and fair values of Sarabet's assets and liabilities were equal when Pascoe acquired its interest.
The separate net incomes (excluding investment income) of Pascoe and Sarabet for 2011 were $600,000 and $100,000,respectively.Dividends declared and paid during 2011 were $250,000 for Pascoe and $50,000 for Sarabet.Pascoe uses the entity theory in consolidating its financial statements with those of Sarabet.
-Pascoe's income from Sarabet under the equity method for 2011 was

• A)$72,000.
• B)$87,500.
• C)$90,000.
• D)$100,000.

Differentiate between various overhead rate calculations based on capacity measures.

Identify the necessity of using departmental overhead rates when cost drivers vary significantly across departments.

Comprehend common bases for allocating costs of shared resources to responsibility centres.

Understand the concept of a cost pool and its role in cost allocation.

---

Definitions:

Expertise

An elaborate and integrated knowledge base that underlies extraordinary proficiency in a given area.

Biological Waste

Material derived from living organisms, such as medical waste or laboratory samples, which can be hazardous and requires specific disposal methods to prevent contamination.

Expertise Peak

The highest level of skill or knowledge that an individual can achieve in a particular domain.

Processing Speed

The rate at which an individual can complete cognitive tasks or understand and react to the information received.