Monson Company Has Two Products: G and P $\quad$ $\quad$

question 55

Multiple Choice

Monson Company has two products: G and P. The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l r r r } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product G } & \text { Product P } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 24,000 & 600 & 900 & 1,500 \\\hline \text { Activity 3 } & 80,000 & 400 & 3,600 & 4,000 \\\hline\end{array}$ The annual production and sales of Product G is 10,640 units. The annual production and sales of Product P is 26,600.


-The activity rate under the activity-based costing system for Activity 2 is closest to which of the following?

• A) $16.00.
• B) $21.97.
• C) $26.67.
• D) $89.33.

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Definitions:

Capital Balances

The amounts of money that partners or shareholders have invested in a company, represented in the equity section of the balance sheet.

Profits And Losses

The financial result of a company's operations, including all revenues and expenses over a given period, indicating overall performance.

Remaining Profits

The profits left after all operating expenses, taxes, and dividends have been deducted.

Original Capital

The initial amount of money invested in a business or venture.