Xcut Calibri - 10 UT Wrap Text General De Copy BIU- >> A == Merge & Center - $ % Format Painter Coboard Font F Alignment Number f A B D E Instructions: Complete the yellow shaded cells. Constrained resources: Plant Capacity, Projected Demand and pounds of grapes available Estate Blend Table lbs of Cabemet grape per bottle 5 lbs of Generic grape per bottle Totallbs of grapes per bottle 0 0 0 10 #t bottles to lbs of Cabernet Ibs of Generic produce grapes needed grapes needed 12 13 14 15 Estate Blend Table Excess or (Shortage) in lbs 16 Pounds of Cabernet grapes 17 purchased Pounds of Genetic grapes 18 purchased 19 20 21 22 23 24 25 26 27 28 29 10 31 WS Orop WS 9. Constraints WS 10 Budgets WS 11Proforma Styles Grizzly Bear Winery (GBW) is a small winery in Portland, OR, Kerry Smith is the CEO and President of the Board of Directors, which is made up of local business owners and professionals. In 2018, Gew had a net margin loss of (-5%) on Sales of approximately $882,500. The company pays a 21% corporate tax rate in the year's when it has a profit. GBW has a relationship with a local vineyard owner who grows two types of wine grapes, a Cabernet and a generic red grape. Last year Gew bought 75,000 lbs. of Cabernet grapes, and 150,000 lbs. of generic grapes. The vineyard can guarantee this amount every year. After the grapes are harvested, they are brought to the winery for processing into wine. The Cabernet wine is fermented in oak barrels. The generic wine is fermented in a stainless steel tank. Gew bottles three wines: Cabernet Estate, a Blended wine, and a Red Table wine. The Cabernet Estate varietal contains only Cabernet grapes and requires 4 tbs of Cabernet grapes. The sales price is $23/bottle. The blended wine is made by combining 1 lb of Cabernet grapes and 2 lbs of generic grapes. The different grapes are fermented separately and blended before bottling. The sales price is $17/bottle. The Table wine is made from only generic grapes and requires 3 lbs of grapes. The sales price is $5.50/bottle. All three wines are packaged at the Gew facility. Current year Sales and unit prices are shown below. Demand for each product is expected to grow significantly, as shown. Table 1 Sales Date Price per bottle Estate Blend Table $23.00 $17.00 $5.50 # of bottles sold 12,000 25,000 33,000 70,000 Expected Demand (next year) 42,000 30,000 56.000 128.000 Since demand is strong and the company sells all of the wine it produces, the CEO suspects that one of the wine varietals is not profitable and is therefore causing the company to be in the red. She needs your help in determining if any of the products are dragging down the profit margin, and if so, what should be done about it. She would like to know if she should cut-pay for some employees, raise prices, change the sales mix, or drop a product. Additionally, the CEO was recently offered the opportunity to buy additional grapes from another vineyard at current market prices. With a fixed capacity of 95,000 bottles, the winery has had enough capacity to meet demand up to this point. Thus far, the only factor that has limited the amount of wine produced has been the number of pounds of grapes that were available to be purchased. The new supplier has can offer an additional 100,000 pounds of Cabernet grapes at $1.15/1b, and an additional 100,000 pounds of the generic grapes at $0.78/1b. This is the same price as the current supplier. The new supplier requires purchase of the grapes in large bins that hold 10,000 lbs of grapes. Therefore, this constraint will affect production planning to minimize waste. DH-MJO9C2B2 ES Align- Group Send Selection Rotte -Tonward Rockrald Pane Astange The CEO would like to understand the implications of this opportunity and how the financial situation would change if she were to buy the extra grapes. Finally, given that demand is so strong, the CEO would like your recommendation on whether or not you would recommend increasing plant capacity. Additional Cost Data Direct Labor Direct Labor Wage rate is $12/hr. Table 2: Direct Laborcos Direct labor by product Cost per bottle Estate $3.00 Blend $2.40 Table $1.80 Hours of labor per bottle 0.25 0.20 20.15 Direct Materials Tabes: Direct Monate Conte Cost per Direct Materials by product Estate Blend Table bottle $ $ $ 4.63 4.15 3.25 Overhead Costs Gaw currently computes overhead costs by using traditional cost allocation methods, but is considering using Activity-based costing, Gow believes that there are three drivers of indirect costs, the number of varietals produced, number of pallets ordered, and the number of manufacturing hours per year. The factory has capacity of 95,000 bottles, and runs on a 24/7 schedule. There are 8,760 manufacturing hours per year (24 hours x 365 days) Torbe : ABC. Cost Pools Activity Pool Wismaking Customer orders Production fupport Cast Driver of varietas Islalete Mihuri Espected Activity level 3 18 Sales Commissions: Distributors are paid a commission of $60 per pallet ordered. Each palet contains 10 or 120 bottles of wine. In 2018, distributors ordered il pallets, for total Commissions paid of $5,000. Recycled scrap grapes if any juice remains after in the oak barre and the stainless steel tank, it cannot be saved for the next year. Therefore, it is composed back into the vineyard. Because of . DH-MJO9C2B2 the difference between the raw materials purchased and the raw materials consumed in production, dependent on the number of varietats produced Utilities fermenting process: Utility costs are incurred primarily to maintain a constant temperature in the fermenting process. These costs were 55,470. This cost depends on the number of manufacturing hours per year. Since the company runs at near capacity, this cost is not expected to fluctuate unless additional capacity were added. In this case it is expected that the cost would rise proportionately to the number of additional bottles produced. The ratio is approximately 50 11 per additional bottle Waste treatment: After crushine, the pulp, skins, and stems that are left over must be disposed of One-half of the waste can be recycled back onto the fields as a compost material the other one half, must be disposed of at a landfill for a dumping cost at $2,000 Wine Master fee: A Master Enologist (Wine-makers formulates and tests the wines. GBW pays the wine master $10,000 per year per varietal for a total of $30,000 Lab Fees: Additionally, the Wine Master uses a local lab for testing the wines at various stages of production Lab fees are approximately 515,000 per year. Sales Manager one full-time employee is paid $85,000/year to sell the GBW wines through distributors Production Supervisor There is one production supervisor Mis salary and benefits total $75,000 annually Administrative salaries the CEO $100,000 annually, and the office staff earn an additional S75,000 combined . Rent Expense: Administrative rent expenses for the sales office in Portland, OR are $24,000/y. The following account balances are for the last day of the reporting period, Dec 31, 2018 A Balance Account Dec 2018 inice Best 34000 Adresas 775.00 Bettie, labore $ 35 36 Bolig bor . 1000 grating labor 6700 $ 12.550 Crush labor 3 5200 Depreciation 1 34000 2010 2015 art 175.000 abentes 15.000 Production Supervisor 75.000 ed 2.000 35.000 Semang Wife 1 40 wa 2.000 Winstrol Chere . DH-MJO9C2B2 De Xcut Calibri - 10 UT Wrap Text General De Copy BIU- >> A == Merge & Center - $ % Format Painter Coboard Font F Alignment Number f A B D E Instructions: Complete the yellow shaded cells. Constrained resources: Plant Capacity, Projected Demand and pounds of grapes available Estate Blend Table lbs of Cabemet grape per bottle 5 lbs of Generic grape per bottle Totallbs of grapes per bottle 0 0 0 10 #t bottles to lbs of Cabernet Ibs of Generic produce grapes needed grapes needed 12 13 14 15 Estate Blend Table Excess or (Shortage) in lbs 16 Pounds of Cabernet grapes 17 purchased Pounds of Genetic grapes 18 purchased 19 20 21 22 23 24 25 26 27 28 29 10 31 WS Orop WS 9. Constraints WS 10 Budgets WS 11Proforma Styles Grizzly Bear Winery (GBW) is a small winery in Portland, OR, Kerry Smith is the CEO and President of the Board of Directors, which is made up of local business owners and professionals. In 2018, Gew had a net margin loss of (-5%) on Sales of approximately $882,500. The company pays a 21% corporate tax rate in the year's when it has a profit. GBW has a relationship with a local vineyard owner who grows two types of wine grapes, a Cabernet and a generic red grape. Last year Gew bought 75,000 lbs. of Cabernet grapes, and 150,000 lbs. of generic grapes. The vineyard can guarantee this amount every year. After the grapes are harvested, they are brought to the winery for processing into wine. The Cabernet wine is fermented in oak barrels. The generic wine is fermented in a stainless steel tank. Gew bottles three wines: Cabernet Estate, a Blended wine, and a Red Table wine. The Cabernet Estate varietal contains only Cabernet grapes and requires 4 tbs of Cabernet grapes. The sales price is $23/bottle. The blended wine is made by combining 1 lb of Cabernet grapes and 2 lbs of generic grapes. The different grapes are fermented separately and blended before bottling. The sales price is $17/bottle. The Table wine is made from only generic grapes and requires 3 lbs of grapes. The sales price is $5.50/bottle. All three wines are packaged at the Gew facility. Current year Sales and unit prices are shown below. Demand for each product is expected to grow significantly, as shown. Table 1 Sales Date Price per bottle Estate Blend Table $23.00 $17.00 $5.50 # of bottles sold 12,000 25,000 33,000 70,000 Expected Demand (next year) 42,000 30,000 56.000 128.000 Since demand is strong and the company sells all of the wine it produces, the CEO suspects that one of the wine varietals is not profitable and is therefore causing the company to be in the red. She needs your help in determining if any of the products are dragging down the profit margin, and if so, what should be done about it. She would like to know if she should cut-pay for some employees, raise prices, change the sales mix, or drop a product. Additionally, the CEO was recently offered the opportunity to buy additional grapes from another vineyard at current market prices. With a fixed capacity of 95,000 bottles, the winery has had enough capacity to meet demand up to this point. Thus far, the only factor that has limited the amount of wine produced has been the number of pounds of grapes that were available to be purchased. The new supplier has can offer an additional 100,000 pounds of Cabernet grapes at $1.15/1b, and an additional 100,000 pounds of the generic grapes at $0.78/1b. This is the same price as the current supplier. The new supplier requires purchase of the grapes in large bins that hold 10,000 lbs of grapes. Therefore, this constraint will affect production planning to minimize waste. DH-MJO9C2B2 ES Align- Group Send Selection Rotte -Tonward Rockrald Pane Astange The CEO would like to understand the implications of this opportunity and how the financial situation would change if she were to buy the extra grapes. Finally, given that demand is so strong, the CEO would like your recommendation on whether or not you would recommend increasing plant capacity. Additional Cost Data Direct Labor Direct Labor Wage rate is $12/hr. Table 2: Direct Laborcos Direct labor by product Cost per bottle Estate $3.00 Blend $2.40 Table $1.80 Hours of labor per bottle 0.25 0.20 20.15 Direct Materials Tabes: Direct Monate Conte Cost per Direct Materials by product Estate Blend Table bottle $ $ $ 4.63 4.15 3.25 Overhead Costs Gaw currently computes overhead costs by using traditional cost allocation methods, but is considering using Activity-based costing, Gow believes that there are three drivers of indirect costs, the number of varietals produced, number of pallets ordered, and the number of manufacturing hours per year. The factory has capacity of 95,000 bottles, and runs on a 24/7 schedule. There are 8,760 manufacturing hours per year (24 hours x 365 days) Torbe : ABC. Cost Pools Activity Pool Wismaking Customer orders Production fupport Cast Driver of varietas Islalete Mihuri Espected Activity level 3 18 Sales Commissions: Distributors are paid a commission of $60 per pallet ordered. Each palet contains 10 or 120 bottles of wine. In 2018, distributors ordered il pallets, for total Commissions paid of $5,000. Recycled scrap grapes if any juice remains after in the oak barre and the stainless steel tank, it cannot be saved for the next year. Therefore, it is composed back into the vineyard. Because of . DH-MJO9C2B2 the difference between the raw materials purchased and the raw materials consumed in production, dependent on the number of varietats produced Utilities fermenting process: Utility costs are incurred primarily to maintain a constant temperature in the fermenting process. These costs were 55,470. This cost depends on the number of manufacturing hours per year. Since the company runs at near capacity, this cost is not expected to fluctuate unless additional capacity were added. In this case it is expected that the cost would rise proportionately to the number of additional bottles produced. The ratio is approximately 50 11 per additional bottle Waste treatment: After crushine, the pulp, skins, and stems that are left over must be disposed of One-half of the waste can be recycled back onto the fields as a compost material the other one half, must be disposed of at a landfill for a dumping cost at $2,000 Wine Master fee: A Master Enologist (Wine-makers formulates and tests the wines. GBW pays the wine master $10,000 per year per varietal for a total of $30,000 Lab Fees: Additionally, the Wine Master uses a local lab for testing the wines at various stages of production Lab fees are approximately 515,000 per year. Sales Manager one full-time employee is paid $85,000/year to sell the GBW wines through distributors Production Supervisor There is one production supervisor Mis salary and benefits total $75,000 annually Administrative salaries the CEO $100,000 annually, and the office staff earn an additional S75,000 combined . Rent Expense: Administrative rent expenses for the sales office in Portland, OR are $24,000/y. The following account balances are for the last day of the reporting period, Dec 31, 2018 A Balance Account Dec 2018 inice Best 34000 Adresas 775.00 Bettie, labore $ 35 36 Bolig bor . 1000 grating labor 6700 $ 12.550 Crush labor 3 5200 Depreciation 1 34000 2010 2015 art 175.000 abentes 15.000 Production Supervisor 75.000 ed 2.000 35.000 Semang Wife 1 40 wa 2.000 Winstrol Chere . DH-MJO9C2B2 De