Danny Baden’s Verde Vineyards in Oakville, California, produces three varieties of wine: Merlot, Viognier, and Pinot Noir. His winemaster, Russel Hansen, has identi?ed the following activities as cost pools for accumulating overhead and assigning it to products.
relocated. (Separate vineyards by variety.)
2. Tying. The posts and wires are reset, and vines are tied to the wires for the dormant season.
3. Trimming. At the end of the harvest, the vines are cut and trimmed back in preparation for the
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 which remove stems and gently crush the grapes.
7. Pressing and ?ltering. The crushed grapes are transferred to presses which mechanically remove
the juices and ?lter out bulk and impurities.
8. Fermentation. The grape juice, by variety, is fermented in either stainless-steel tanks or oak
9. Aging. The wines are aged in either stainless-steel tanks or oak barrels for one to three years
depending on variety.
10. Bottling and corking. Bottles are machine-?lled and corked.
11. Labeling and boxing. Each bottle is labeled, as is each nine-bottle case, 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. Heating and air-conditioning of plant and of?ces.
15. Maintenance of buildings and equipment. Printing, repairs, replacements, and general
maintenance are performed in the off-season.
For each of Verde’s 15 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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