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E5.25 (LO 2) Peter Catalano's Verde Vineyards, in the Niagara Peninsula, produces three varieties of wine: merlot, viognier, and pinot noir. His winemaster, Kyle Pohle,
E5.25 (LO 2) Peter Catalano's Verde Vineyards, in the Niagara Peninsula, produces three varieties of wine: merlot, viognier, and pinot noir. His winemaster, Kyle Pohle, has identified the following activities as cost pools for accumulating overhead and assigning it to products. 1. Spraying: The vines are sprayed with chemicals for protection against insects and fungi. 2. Harvesting: The grapes are hand-picked, placed in carts, and transported to the crushers. 3. Stemming and crushing: Cartfuls of bunches of grapes of each variety are separately loaded into machines, which remove stems and gently crush the grapes. 4. Pressing and filtering: The crushed grapes are transferred to presses that mechanically remove the juices and filter out bulk and impurities. 5. Fermentation: The grape juice, by variety, is fermented in either stainless-steel tanks or oak barrels. 6. Aging: The wines are aged in either stainless-steel tanks or oak barrels for one to three years, depending on the variety. 7. Bottling and corking: Bottles are machine-filled and corked. 8. Labelling and boxing: Each bottle is labelled, as is each nine-bottle case, with the name of the vintner, vintage, and variety. 9. Storing: Packaged and boxed bottles are stored awaiting shipment. 10. Shipping: The wine is shipped to distributors and private retailers. 11. Heating and air-conditioning of factory and offices. 12. Maintenance of buildings and equipment: Repairs, replacements, and general maintenance are performed in the off-season. Instructions For each of Verde's 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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