question archive Brehm Vineyards Brehm Vineyards grows a unique white pinot noir grape that they use to produce a white wine that is in high demand
Brehm Vineyards Brehm Vineyards grows a unique white pinot noir grape that they use to produce a white wine that is in high demand. Brehm uses all the grapes they can grow to produce their own white pinot noir wine. Brehm pinot noir wine contains 100 percent Brehm-grown grapes. The company neither buys nor sells grapes. Because of the uniqueness and difficulty of growing white pinot grapes, Brehm can only produce 8,000 cases (12 bottles per case) in a normal year. A good growing season might yield 10,000 cases, whereas bad weather can cut production to 5,000 cases. In a normal year Brehm expects to sells its wine to wholesalers for $120 per case. The following table summarizes how Brehm managers expect their costs to vary with the number of cases produced.
Fixed cost Variable cast
(per year) (per case)
Grape costs $240,000 $2.10
Labor 75,000 2.15
Selling and administrative costs 36000
Utilities 4,000 0.75