Wine and Probable Cost Driver Essay Example for Free

Wine and Probable Cost Driver Essay Peter Catalanos Verde Vineyards in Oakville, California produces three varieties of wine: Merlot, Viognier, and Pinot Noir. His winemaster, Kyle Ward, has identified the following activities as cost pools for accumulating overhead and assigning it to products. For each of Verdes fifteen activity cost pools, identify a probable cost driver that might be used to assign overhead costs to its three wine varieties. 1. | Culling and replanting. Dead or overcrowded vines are culled, and new vines are planted or relocated. (Separate vineyards by variety. ) | Labor hour| 2. | Tying. The posts and wires are reset, and vines are tied to the wires for the dormant season. | Labor hour| 3. | Trimming. At the end of the harvest the vines are cut and trimmed back in preparation for the next season. | Labor hour| 4. | Spraying. The vines are sprayed with chemicals for protection against insects and fungi. | Gallons of chemical| 5. | Harvesting. The grapes are hand-picked, placed in carts, and transported to the crushers. | Number of cartfuls or labor hours| 6. | Stemming and crushing. Cartfuls of bunches of grapes of each variety are separately loaded into machines which remove stems and gently crush the grapes. Number of cartfuls| 7. | Pressing and filtering. The crushed grapes are transferred to presses which mechanically remove the juices and filter out bulk and impurities. | Gallons of juice| 8. | Fermentation. The grape juice, by variety, is fermented in either stainless-steel tanks or oak barrels. | Gallons of juice| 9. | Aging. The wines are aged in either stainless-steel tanks or oak barrels for one to three years depending on variety. | Gallons of wine or months of aging| 10. | Bottling and corking. Bottles are machine-filled and corked. | Number of bottles| 11. | Labeling and boxing. Each bottle is labeled, as is each nine-bottle case, with the name of the vintner, vintage, and variety. | #. Of bottles| 12. | Storing. Packaged and boxed bottles are stored awaiting shipment. | # of boxes| 13. | Shipping. The wine is shipped to distributors and private retailers. | # of shipments| 14. | Heating and air-conditioning of plant and offices. | Number of gallons processed| 15. | Maintenance of buildings and equipment. Printing, repairs, replacements, and general maintenance are performed in the off-season. | # of gallons processed.