E16.10 Identify activity cost drivers and classify activities as value-added or non-value-added. LO7, 9 Valliance Vineyards produces three varieties of wine: Merlot, Shiraz and Pinot Noir. The wine master, Sue, has identified 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. Trimming — at the end of the harvest the vines are cut and trimmed back in preparation for the next season.

3. Tying — the posts and wires are reset and vines are tied to the wires for the dormant 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 that remove stems and gently crush the grapes.

7. Pressing and filtering — the crushed grapes are transferred to presses that mechanically remove the juices and filter out bulk and impurities.

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

9. Ageing — the wines are aged in either stainless-steel tanks or oak barrels for 1 to 3 years depending on variety.

10. Bottling and corking — bottles are machine-filled and corked.

11. Labelling and boxing — each bottle and each 9-bottle case is labelled 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. Maintenance of buildings and equipment — printing, repairs, replacements and general maintenance are performed in the off-season.

15. Heating and air conditioning of plant and offices.

Required

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

(b) In an effort to expand the usefulness of its activity-based costing system, the vineyard uses activity-based management techniques. One of these ABM techniques is qualifying its activities as either value-added or non-value-added. Using the list of 15 activity cost pools, classify each of the activities as either value-added or non-value-added.