Van Meter Company Has Substantial Fluctuations in Its Production Costs

question 153

Essay

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.

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Definitions:

Labor Forces

The total number of people aged 16 and over who are either working or actively looking for work.

Wages

Payments made to workers for their labor, typically calculated on an hourly, daily, or piecework basis.

Comparative Advantage

The ability of a country or company to produce a particular good or service at a lower opportunity cost than its competitors.

Producing

The process of creating goods or services through the combination of labor, materials, and technology.