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ACC349 WEEK 3 Coats Galore Peter Catalano

Price: $3.50

ACC349 WEEK 3 BE4-6 BE4-7 E4-9

BE4-6 Coats Galore, Inc. uses activity-based costing as the basis for information to set

prices for its six lines of seasonal coats. Compute the activity-based overhead rates using
the following budgeted data for each of the activity cost pools.

BE4-7 Computer Parts, Inc., a manufacturer of computer chips, employs activity-based
costing. The following budgeted data for each of the activity cost pools is provided below
for the year 2005.

For 2005, the company had 11,000 orders and used 50,000 machine hours, and labor

hours totaled 500,000. What is the total overhead applied?

E4-9 Peter Catalano’s Verde Vineyards in Oakville, California produces three varieties of
wine: Merlot, Viognier, and Pinot Noir. His winemaster, Kyle Ward, 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. Tying. The posts and wires are reset, and vines are tied to the wires for the dormant

3. Trimming. At the end of the harvest the vines are cut and trimmed back in preparation
for the next 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

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 filtering. The crushed grapes are transferred to presses which 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. 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-filled 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 offices.

15. Maintenance of buildings and equipment. Printing, repairs, replacements, and general
maintenance are performed in the off-season.

For each of Verde’s fifteen 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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