Question details

Cost driver for 3 different but similiar items
$ 10.00

Danny Baden’s Verde Vineyards in Oakville, California, produces three varieties of wine: Merlot, Viognier, and Pinot Noir. His winemaster, Russel Hansen, has identi?ed the following activities as cost pools for accumulating overhead and assigning it to products.

  1. Culling and replanting. Dead or overcrowded vines are culled, and new vines are planted or

relocated. (Separate vineyards by variety.)

2. Tying. The posts and wires are reset, and vines are tied to the wires for the dormant season.

3. Trimming. At the end of the harvest, the vines are cut and trimmed back in preparation for the

next season.

4. Spraying. The vines are sprayed with chemicals for protection against insects and fungi.

5. Harvesting. The grapes are hand-picked, placed in carts, and transported to the crushers.

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.

7. Pressing and ?ltering. The crushed grapes are transferred to presses which mechanically remove

the juices and ?lter out bulk and impurities.

8. Fermentation. The grape juice, by variety, is fermented in either stainless-steel tanks or oak

barrels.

9. Aging. The wines are aged in either stainless-steel tanks or oak barrels for one to three years

depending on variety.

10. Bottling and corking. Bottles are machine-?lled and corked.

11. Labeling and boxing. Each bottle is labeled, as is each nine-bottle case, with the name of the

vintner, vintage, and variety.

12. Storing. Packaged and boxed bottles are stored awaiting shipment.

13. Shipping. The wine is shipped to distributors and private retailers.

14. Heating and air-conditioning of plant and of?ces.

15. Maintenance of buildings and equipment. Printing, repairs, replacements, and general

maintenance are performed in the off-season.

 

Instructions

For each of Verde’s 15 activity cost pools, identify a probable cost driver that might be used to assign overhead costs to its three wine varieties.

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