Using a single indirect cost rate for a whole department is adequate when a) It is a service department b)Product costs are significantly cross-subsidized c)Activities relate to more than one level of the cost hierarchy d)The same allocation base is appropriate for all departmental activities

Albers Co. has two productsKAR and BEA. KAR has a high market share and is produced in bulk. Production of BEA is based on customer orders and is custom designed. Also, 55% of BEA's cost is shared between design and setup costs, while KAR's major portions of costs are direct costs. Albers is using a single cost pool to allocate indirect costs. Which of the following statements is true? a)Albers will overcost BEA's indirect costs because BEA has high indirect costs. b)Albers will undercost KAR's indirect costs because KAR has high direct costs. c)Albers will overcost BEA's direct costs as it is using a single cost pool to allocate indirect costs. d)Albers will overcost KAR's indirect costs as it is using a single cost pool to allocate indirect costs.