Question

RE: Local brewery

Describe in complete detail how you believe beer it is made (research is acceptable). What type of costing method do you believe is used to account for its costs (Job Order Cost system or Process Order Cost system)? What is the process used to make the item? What are the direct costs for the materials; what kinds of direct labor are required and what types of indirect costs are included as product costs? Is the product labor intensive or does it have a relatively high proportion of materials and/or overhead in its total cost?

Answer 1

How Beer is Made:  Beer is made of mixture of Sugar extraction from Barley so that Yeast can works on it to convert them into Beer. Ingredients used are Barley, Hops, Pure Water and Yeast.

What type of costing method do you believe is used to account for its costs : Process Costing will be best suited for Making beer as homogenous product is being produced and which went through various process to form into finish product.

What is the process used to make the item?:

1	Milling : Crush The Grains
2	Mash Conversion: Mash it with Heated Pure water for extraction of Sugar from the grains
3	Lautering : Separation of Sugar Part ( Wort) from Husk
4	Boiling: Boiling of Wort before Hops are Added
5	Wort Separation : Here only liquid will be transferred which ned to be fermentaed and Cooled. ( nO Hops NO Husk)
6	Fermentation: Yeast Added.
7	Maturation: Full development of Beer and Flavours
8	Filtration, Carbonation: Refiend Beer Filtered and induced with CO2
9	Cellaring: Cellaring process required around 1 months to refine in proper beer form.
10	Bottling: Stored in bottles.

What are the direct costs for the materials: Direct Cost is Simply BArley , Yeast , Hops and Pure Water or Other added flavours as required.

what kinds of direct labor are required: BrewHouse Labour, Packaging Labour, Bottling Labour, Warehouse Storage Labour to be used.

what types of indirect costs are included as product costs?: Brewhouse Cost , Cost incurred for mainteance of Brewhouse working or running for production ( Fermentation House)

Is the product labor intensive or does it have a relatively high proportion of materials and/or overhead in its total cost: It is Not Labour Inensive, it is composed of High Proportion of Material / Overheads. Becasue if the Quantity of output is small like 10 bottles in a Month at smaler scale the it require raw material and not pabour becasue such production can be done by single handedly and furtehr process will be doen by the yeast itself and fermentation process in brewery house, even if the production is to be increased siply increased the input of raw material rather thna increasing the Labour over a perido of time hence, It is Composed of High proportion of Material and Indirect cost rather than Labour Cost .