SO2 Measurement Methods
If you and your winery would like to explore the idea of how a Standard Costing model could help you cost your wine faster, cheaper, and with better information, please contact Tim Allen at Allen Wine Group. Winemakers from around Virginia gathered (virtually) to discuss results of two experiments. In the second, Kirsty Harmon (Blenheim Vineyards) compared the chemical, microbiological, and sensory effects of different SO2 addition rates after completion of fermentation in Chardonnay. If you are using the Ripper titration, there are some steps to take to make it as accurate as possible. A pinch of bicarbonate can be added to blanket the liquid/air interface with CO2, making volatilization of SO2 and dissolution of O2 less likely2,3. A small desk lamp can be used to provide backlight to the titration, making endpoint determination easier.
Production works with purchasing to determine what material will work best in production and will be the most cost efficient. Production will work with personnel to determine labor costs for the product, which is based on how long it will take to make the product, which departments will be involved, and what type and number of employees it will take. When a variance occurs in its standards, the company investigates to determine the causes, so they can perform better in the future. It can determine the cost and selling price of a power antenna by knowing the standard material cost for the antenna and the standard labor cost of adding the antenna to the vehicle. General Motors also can add up all of the standard times for all vehicles it makes to determine if too much or too little labor was used in production. These standards can then be used in establishing standard costs that can be used in creating an assortment of different types of budgets.
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For more detail into the chemistry of SO2, target SO2 levels and management strategies, see the July 2020 Newsletter on SO2 Management. Since cost-accounting methods are developed by and tailored to a specific firm, they are highly customizable and adaptable. Managers appreciate cost accounting because it can be adapted, tinkered with, and implemented according to the changing needs of the business. Unlike the Financial Accounting Standards Board (FASB)-driven financial accounting, cost accounting need only concern itself with insider eyes and internal purposes. Management can analyze information based on criteria that it specifically values, which guides how prices are set, resources are distributed, capital is raised, and risks are assumed.
When this binding occurs it lowers the amount of free SO2 that remains in the wine after we make an addition. Therefore, if we want to maintain accurate free SO2 levels, we need to test our wines after making an addition and make up any losses of free SO2 that became bound. Ranking should look to how stakeholders are affected by costs and any decisions related to cost variance, or why the variance occurred. For example, if a cost variance is due to an additional cost to make a product eco-friendly, then an organization may determine that incurring the cost is a benefit to its stakeholders. However, if the additional cost creates an unfavorable situation for a stakeholder, the process incurring the cost should be investigated.
Winery Fraud Schemes
Even though companies cannot use cost-accounting figures in their financial statements or for tax purposes, they are crucial for internal controls. Records must be kept for loss, leakage, and voluntary destruction quantities, because no tax will be charged on those amounts. The TTB has specific mandated limits for these losses; its Report of Wine wine accounting Premises Operations (Form F5120.17) requires information on various categories of losses, and a failure to satisfactorily explain shortages may require tax assessment. Attempting to avoid payment of excise taxes for any reason, including the falsification of production levels or loss amounts, can result in the revocation of a winery’s permit.
- Many internal controls utilized in other industries to protect against and detect asset misappropriation are relevant to wineries as well.
- However, today, many managers are still evaluated on their labor efficiencies, and many downsizing, rightsizing, and other labor reduction campaigns are based on them.
- For most restaurants, that works out to a number between 4 (on the generous side) and 6 (on the less generous side).
- While you may initially record the cost of grapes separately (if you are farming, this will be more complex than if you are buying grapes), it will be added to the other expenses, such as fermentation and cellar costs, to get to your bulk wine cost.
- However, the three-tier model is the most common distribution channel in the US.