diff --git a/services/core/java/com/android/server/wm/ActivityRecord.java b/services/core/java/com/android/server/wm/ActivityRecord.java
index b946e7e060443..7ada2135212c2 100644
--- a/services/core/java/com/android/server/wm/ActivityRecord.java
+++ b/services/core/java/com/android/server/wm/ActivityRecord.java
@@ -8307,6 +8307,10 @@ final class ActivityRecord extends WindowToken implements WindowManagerService.A
      * requested in the config or via an ADB command. For more context see {@link
      * LetterboxUiController#getHorizontalPositionMultiplier(Configuration)} and
      * {@link LetterboxUiController#getVerticalPositionMultiplier(Configuration)}
+     * <p>
+     * Note that this is the final step that can change the resolved bounds. After this method
+     * is called, the position of the bounds will be moved to app space as sandboxing if the
+     * activity has a size compat scale.
      */
     private void updateResolvedBoundsPosition(Configuration newParentConfiguration) {
         final Configuration resolvedConfig = getResolvedOverrideConfiguration();
@@ -8368,6 +8372,18 @@ final class ActivityRecord extends WindowToken implements WindowManagerService.A
 
         // Since bounds has changed, the configuration needs to be computed accordingly.
         getTaskFragment().computeConfigResourceOverrides(resolvedConfig, newParentConfiguration);
+
+        // The position of configuration bounds were calculated in screen space because that is
+        // easier to resolve the relative position in parent container. However, if the activity is
+        // scaled, the position should follow the scale because the configuration will be sent to
+        // the client which is expected to be in a scaled environment.
+        if (mSizeCompatScale != 1f) {
+            final int screenPosX = resolvedBounds.left;
+            final int screenPosY = resolvedBounds.top;
+            final int dx = (int) (screenPosX / mSizeCompatScale + 0.5f) - screenPosX;
+            final int dy = (int) (screenPosY / mSizeCompatScale + 0.5f) - screenPosY;
+            offsetBounds(resolvedConfig, dx, dy);
+        }
     }
 
     void recomputeConfiguration() {
diff --git a/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java b/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
index d77b6ada268e0..4eb070df0e47b 100644
--- a/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
+++ b/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
@@ -573,11 +573,11 @@ public class SizeCompatTests extends WindowTestsBase {
         // The scale is 2000/2500=0.8. The horizontal centered offset is (1000-(1000*0.8))/2=100.
         final float scale = (float) display.mBaseDisplayHeight / currentBounds.height();
         final int offsetX = (int) (display.mBaseDisplayWidth - (origBounds.width() * scale)) / 2;
-        assertEquals(offsetX, currentBounds.left);
+        final int screenX = mActivity.getBounds().left;
+        assertEquals(offsetX, screenX);
 
-        // The position of configuration bounds should be the same as compat bounds.
-        assertEquals(mActivity.getBounds().left, currentBounds.left);
-        assertEquals(mActivity.getBounds().top, currentBounds.top);
+        // The position of configuration bounds should be in app space.
+        assertEquals(screenX, (int) (currentBounds.left * scale + 0.5f));
         // Activity is sandboxed to the offset size compat bounds.
         assertActivityMaxBoundsSandboxed();
 
@@ -607,7 +607,7 @@ public class SizeCompatTests extends WindowTestsBase {
         // The size should still be in portrait [100, 0 - 1100, 2500] = 1000x2500.
         assertEquals(origBounds.width(), currentBounds.width());
         assertEquals(origBounds.height(), currentBounds.height());
-        assertEquals(offsetX, currentBounds.left);
+        assertEquals(offsetX, mActivity.getBounds().left);
         assertScaled();
         // Activity is sandboxed due to size compat mode.
         assertActivityMaxBoundsSandboxed();
@@ -770,9 +770,11 @@ public class SizeCompatTests extends WindowTestsBase {
         assertEquals(origAppBounds.height(), appBounds.height());
         // The activity is 1000x1400 and the display is 2500x1000.
         assertScaled();
-        // The position in configuration should be global coordinates.
-        assertEquals(mActivity.getBounds().left, currentBounds.left);
-        assertEquals(mActivity.getBounds().top, currentBounds.top);
+        final float scale = mActivity.getCompatScale();
+        // The position in configuration should be in app coordinates.
+        final Rect screenBounds = mActivity.getBounds();
+        assertEquals(screenBounds.left, (int) (currentBounds.left * scale + 0.5f));
+        assertEquals(screenBounds.top, (int) (currentBounds.top * scale + 0.5f));
 
         // Activity max bounds are sandboxed due to size compat mode.
         assertActivityMaxBoundsSandboxed();