Van Meter Company has substantial fluctuations in its production costs because of the seasonality of figs. Most fig growers have two crops a year, one in June and one in August. However, the company has been importing figs from southern hemisphere countries, which extends the supply to the months of December and February.
Required:
What would you recommend as the monthly allocation base for the service departments of Van Meter Company? State your assumed cost object. A conceptual answer is required, not an example, such as cartons of figs.

Question

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The Answer of Van Meter Company has substantial fluctuations in its production costs because of the seasonality of figs. Most fig growers have two crops a year, one in June and one in August. However, the company has been importing figs from southern hemisphere countries, which extends the supply to the months of December and February.
Required:
What would you recommend as the monthly allocation base for the service departments of Van Meter Company? State your assumed cost object. A conceptual answer is required, not an example, such as cartons of figs.

Van Meter Company Has Substantial Fluctuations in Its Production Costs