A Votre Sante Teaching Note
TEACHING NOTE: A VOTRE SANTÉ 1
The A Votre Santé (AVS) case is multi-faceted in that it requires students to incorporate operational measures into product costing results, and also to understand cost accounting from a variety of perspectives, such as:
Product versus period costs
Variable versus fixed costs
Activity based costing
Relevant costs and opportunity costs
Additionally, the case questions require both quantitative and qualitative analyses of the business issues faced by AVS. AVS has been used in a graduate-level managerial accounting class for MBAs, and would be most appropriate for an advanced undergraduate or a graduate-level accounting or MBA course.
The detail in the case is rich enough to support a variety of analyses. Alternative uses could be to have the student construct a cost of goods manufactured statement or a traditional financial statement, both of which reinforce the differences between product and period costs. Additionally, alternative decision analysis questions could be developed using the variable and fixed cost structures described in the case. Case question number two is only one example of a potential decision analysis question.
(a) Contribution Margin Income Statement
To develop the contribution margin income statement, you first have to calculate the number of bottles of wine produced by AVS. This number is dependent upon the yield from the grapes. The relevant calculations are as follows:
Chardonnay
Generic
Yield:
Grapes
Grapes
Pounds harvested
100,000
60,000
Loss in processing
10,000
10%
3,000
5%
Yield:
90,000
57,000
Bottles of wine produced:
Chardonnay
Blanc de
Estate
Regular
Blanc
Total
Pounds of grapes:
Chardonnay grapes
72,000
18,000
0
90,000
Generic grapes 0
9,000
48,000
57,000
Total pounds of grapes
72,000
27,000
48,000
147,000
Bottles (3 lb./bottle)
24,000
The A Votre Santé (AVS) case is multi-faceted in that it requires students to incorporate operational measures into product costing results, and also to understand cost accounting from a variety of perspectives, such as:
Product versus period costs
Variable versus fixed costs
Activity based costing
Relevant costs and opportunity costs
Additionally, the case questions require both quantitative and qualitative analyses of the business issues faced by AVS. AVS has been used in a graduate-level managerial accounting class for MBAs, and would be most appropriate for an advanced undergraduate or a graduate-level accounting or MBA course.
The detail in the case is rich enough to support a variety of analyses. Alternative uses could be to have the student construct a cost of goods manufactured statement or a traditional financial statement, both of which reinforce the differences between product and period costs. Additionally, alternative decision analysis questions could be developed using the variable and fixed cost structures described in the case. Case question number two is only one example of a potential decision analysis question.
(a) Contribution Margin Income Statement
To develop the contribution margin income statement, you first have to calculate the number of bottles of wine produced by AVS. This number is dependent upon the yield from the grapes. The relevant calculations are as follows:
Chardonnay
Generic
Yield:
Grapes
Grapes
Pounds harvested
100,000
60,000
Loss in processing
10,000
10%
3,000
5%
Yield:
90,000
57,000
Bottles of wine produced:
Chardonnay
Blanc de
Estate
Regular
Blanc
Total
Pounds of grapes:
Chardonnay grapes
72,000
18,000
0
90,000
Generic grapes 0
9,000
48,000
57,000
Total pounds of grapes
72,000
27,000
48,000
147,000
Bottles (3 lb./bottle)
24,000