Managerial Accounting – Week 4 Assignment
Wk 4 Problem
Coca-Cola’s primary line of business is the making and selling of syrup to bottlers. These bottlers then sell the finished bottles and cans of Coca-Cola to the consumer.
Coca Cola measures their sales volume in two ways: (1) gallon shipments of concentrates and syrups and (2) unit cases of finished product (bottles and cans of Coke sold by bottlers).
Use the following link https://investors.coca-colacompany.com/ to find the most current annual review for Coca-Cola.
Answer the following questions.
1. In your opinion, are Coca-Cola’s marketing expenditures a fixed cost, variable cost, or mixed cost? Give justification for your answer.
2. Are sweeteners and packaging a variable cost or fixed cost? What is the impact on the contribution margin of an increase in the per unit cost of sweeteners or packaging? What are the implications for profitability?
3. Which of the two measures cited for measuring volume represents the activity index? Why might Coca-Cola use two different measures?