Paul Company Has Two Products: a AndB The Activity Rate Under the Activity-Based Costing System for Activity

question 32

Multiple Choice

Paul Company has two products: A andB. The company uses activity-based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows: $\begin{array}{lrr}&\text { Estimated}& \text {Expected Activity }\\\text { Activity CostPool }&\text { Cost }& \text {ProductA}&\text { Product B}&\text { Total }\\ \text {Activity 1 } &£ 22,000&400 &100 &500\\\\ \text { Activity 2. } &£ 16,240& 380& 200 &580\\\\ \text { Activity 3 } &£14,600& 500 &250 & 750\\\end{array}$

The activity rate under the activity-based costing system for Activity 3 is closest to

• A)£70.45.
• B)£28.87.
• C)£19.47.
• D)£58.40.

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Definitions:

Noncontrolling Interest

Noncontrolling interest is a financial stake in a subsidiary held by investors other than the parent company, reflecting their share of the subsidiary's net assets and earnings.

Goodwill

The excess value paid for a company over its net asset value, reflecting intangible assets such as brand reputation, customer relationships, and intellectual property.

Acquisition-Date

The specific date on which one entity gains control over another, which is crucial for recognizing and measuring the assets acquired, liabilities assumed, and any noncontrolling interest.

Control Premium

An additional amount that a buyer is willing to pay over the current market price to acquire a controlling interest in a company.