Aqua Company Produces Two Products-Alpha and Beta

question 14

Multiple Choice

Aqua Company produces two products-Alpha and Beta. Alpha has a high market share and is produced in bulk. Production of Beta is based on customer orders and is custom designed. Also, 55% of Beta's cost is shared between design and setup costs, while Alpha's major portions of costs are direct costs. Alpha is using a single cost pool to allocate indirect costs. Which of the following statements is true of Aqua?

• A) Aqua will overcost Beta's direct costs as it is using a single cost pool to allocate indirect costs.
• B) Aqua will undercost Alpha's indirect costs because alpha has high direct costs.
• C) Aqua will overcost Alpha's indirect costs as it is using a single cost pool to allocate indirect costs.
• D) Aqua will overcost Beta's indirect costs because beta has high indirect costs.

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Definitions:

Digestive Tract

A complex series of organs and glands responsible for the digestion and absorption of nutrients, elimination of waste, and food transportation.

Symmetrical Body Plan

A layout of an organism's body parts in a balanced distribution around a central line or point, allowing for the division into mirror-like halves.

Tissues

Groups of cells in an organism that have similar structure and function.

Mantle

In geology, the layer of the Earth between the crust and the outer core; in biology, a tissue that encloses the vital organs of mollusks and secretes the shell.