Monson Corporation has two products: G and P. The company uses activity-based co
ID: 2469960 • Letter: M
Question
Monson Corporation has two products: G and P. The company uses activity-based costing and has prepared the following analysis showing the total cost and activity for each of its three activity cost pools: Activity Activity Cost Pool Total Cost Product G Product P Total Activity 1 $136,880 360 2,000 2,360 Activity 2 $78,240 760 2,500 3,260 Activity 3 $91,302 560 3,920 4,480 The annual production and sales of Product G is 117,040 units. The annual production and sales of Product P is 33,000. The activity rate under the activity-based costing system for Activity 2 is closest to: $26.60 $36.96 $24.00 $31.30
Explanation / Answer
THE ACTIVITY RATE UNDER THE ACTIVITY-BASED COSTING SYSTEM FOR ACTIVITY 2 IS
= ACTIVITY COST / TOTAL ACTIVITY
= $78240 / 3260
= $24.00