Case Study Essays

1953 Words Nov 8th, 2012 8 Pages
ISSN 1940-204X

À Votre Santé: Product Costing and Decision Analysis in the Wine Industry
Priscilla S. Wisner University of Tennessee

The Aproveche family owns and operates a small independent winery located in the Napa Valley California American Viticultural Area (AVA).1 À Votre Santé (AVS), which means “to your health” in French, enjoys a reputation for producing small amounts of quality wines. AVS was started by Jerome Aproveche in 2005 as an extension of the family’s grapegrowing operations and as a means to involve his children in the wine business. This path is not an unusual one in Napa Valley, where there are more than 600 grape growers and over 500 wine producers and blenders, many of which are small family-owned
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The materials cost associated with the bottles, corks, and labels averages $2.50/bottle. DIRECT LABOR • Harvest labor is paid an average of $9.00/hour. An average of 80 pounds of grapes can be harvested each hour. • Crush labor is paid an average of $10.00/hour. The crushing process typically takes 300 hours to complete. OVERHEAD EXPENSES • Administrative rent and office expenses: currently $20,000 annually. • Depreciation is charged based on the following equipment schedule:
Equipment Cost Est. Life


All three wines are bottled at AVS using one bottling line. In a typical year, AVS bottles enough Chardonnay-Estate to meet the sales projection, and then bottles the regular Chardonnay after blending all remaining Chardonnay wine with the necessary amount of generic grapes. The Blanc de Blanc is the last wine to be bottled, using all remaining generic white grapes.

CHARDONNAY GRAPES • 2009 harvest: 100,000 pounds • purchase price: $85,500 • expected loss in volume through fermentation: 10% GENERIC WHITE GRAPES • 2009 harvest: 60,000 pounds • purchase price: $38,500 • expected loss in volume through fermentation: 5%  WINEMAKING • Chardonnay grapes are fermented in oak barrels; each barrel results in the production of 40 cases of wine. • Barrels cost $500 apiece. Because the barrels lose some of their oak flavorings each use, AVS

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