Classic Pen Company Case

4559 Words Apr 25th, 2013 19 Pages
A VOTRE SANTÉ: PRODUCT COSTING AND DECISION ANALYSIS IN THE WINE INDUSTRY

Priscilla S. Wisner
Department of Accounting and Information Management College of Business University of Tennessee 638 Stokely Management Center Knoxville, TN 37996 Phone: 865.974.1714 Email: pwisner@utk.edu

Case: A Votre Santé Page 1 of 17

Electronic copy available at: http://ssrn.com/abstract=1659912

BACKGROUND A Votre Santé (AVS) is a small, independent winery owned by Kay Aproveche. Kay has a relationship with a grower who grows two types of wine grapes, a Chardonnay and a generic white grape. AVS buys the grapes at the point that they have ripened on the vine. AVS is responsible for harvesting the grapes and all further processing of the grapes
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The materials cost associated with the bottles, corks and labels are estimated to be $2.50/bottle. Direct Labor Harvest labor is paid an average of $7.25 / hour. It is estimated that 80 pounds of grapes can be harvested each hour. Crush labor is paid an average of $8.00/hour. It is estimated that it will take 300 hours to crush the grape harvest. Overhead Expenses Administrative rent and office expenses – Estimated to be $20,000 / year. Depreciation is charged based on the following equipment schedule:
Case: A Votre Santé Page 4 of 17

Equipment Tractors Crushers Holding Tank Bottle Lines

Cost $15,000 $6,000 $40,000 $10,000

Est. Life 10 years 10 years 20 years 10 years 5 years

Other Production Equipment $15,000

Indirect Materials – Part of the wine-making process involves introducing yeasts and other

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