The Guy Fawkes Company is noted for an exceptionally impressive line of Mardi Gras masks. Guy Fawkes has established the following selling and distribution support activity-cost pools and their corresponding activity drivers for the current year:
Required:
a. Determine the activity-cost-driver rate for each of the four selling and distribution activities.
b. Describe at least one possible negative behavioural consequence for each of the four activity-cost drivers.
Definitions:
Loss on Sale
Loss on Sale occurs when the selling price of an asset is less than its carrying amount on the books, resulting in a financial loss.
Accumulated Depreciation
The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired, representing its decrease in value.
Gain on Sale
The profit earned from selling an asset for more than its book value or purchase price.
Cash
The amount of currency and liquid instruments in a company's possession, used for financial transactions.
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