The Pattia Winery is one of the finest wineries in the country. One of its famou

Question

The Pattia Winery is one of the finest wineries in the country. One of its famous products is a red wine called Old Vines. Recently, management has become concerned about the increasing cost of making Old Vines and needs to determine if the current selling price of $10 per bottle is adequate. The winery wants to achieve a 25 percent gross profit on the sale of each bottle. The following information is given to you for analysis:

Compute the prime costs per unit and the conversion costs per unit. Round your answer to two decimal places. If an amount box does not require an entry, leave it blank.

Prime Costs Conversion Costs
Direct materials $ $
Direct labor $ $
Overhead $ $
Totals $ $

Unit cost per bottle

Materials $3.5

Labor $2.3

Overhead $3.3

Batch size 10,550
Cost
Direct Material
Olen grapes 22,155
Chancellor grape 9,495
Bottles 5,275
Total direct materials costs $36,925

Direct Labor
Pickers 2,110
Crusher 422
Processor 8,440
Bottler 13,293
Total direct labor costs $24,265

Overhead
Deprec. Equip 2,743
Deprec. build 5,275
Utilities 1,055
Indirect labor 6,330
Supervison 7,385
Supplies 9,917
Repairs 1,477
Misc 633
Total overhead cost $34,815
Total Production cost $96,005

Explanation / Answer

Direct Materials: Olen millet Grapes - 22155 chancellor grapes - 9495 Bottles - 5475 total direct material costs = $36925 Direct Labour : Picker or Labour - 2110 chrusher - 422 processors - 8440 bottler - 13293 total direct labour=$24265 OverHead Depreciation equipment - 2743 depreciation building - 5275 utilities - 1055 indirect labour - 6330 supervision - 7385 supplies - 9917 repairs - 1477 miscellaneous - 633 total over head costs = $34815 total production costs = $ 96005

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