The Coca Cola Company
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The Following involves the analysis of the costing techniques followed by the company along with its Budgeting system. It also involves the Investment appraisal analysis for the given data.
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TABLE OF CONTENTS:
CONTENTS:
1)INTRODUCTION…………………………………………………………………....03
2)FOUNDATION AND HISTORY…………………………………………………...03
3)COSTING TECHNIQUES…………………………………………………………..04
4)COCA COLA’S COSTING TECHNIQUE ………………………………………..05
5)BUDGETING SYSTEMS…………………………………………………………….06
6)BUDGETING SYSTEM OF COCA COLA……………………………………… 07
7)INVESTMENT APPRAISAL ANALYSIS…………………………………………..10
8)CONCLUSION…………………………………………………………………………12
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The costing technique followed by the Coca-cola Company is Process Costing which is one of the forms of Absorption Costing.
The Coca-cola company is a homogeneous product manufacturer company. With 1.7 Billions units sold a day, the company is the largest soft drink manufacturer in the world and hence it becomes important to have a simple accounting system to determine how much these products should be sold at. The process costing determines the average cost for each unit so that it is easy to sell both a large amount of products or a small amount and understand how much profit is being made on the products. This type of accounting system would not be as effective if the company was creating many different items that had different costs of tasks throughout the process.
With this costing technique , a Manager can easily determine if there is a weak link in production chain by keeping an eye on the cost per unit each day. Using the accounting programs involved in process costing, a manager can figure out where in the process the item 's per unit cost is going up. This way a single manager or a team of managers can monitor millions of units being produced without needing to check on each department unless a problem comes up. By the same token, these numbers need to be watched diligently, as a change of even a fraction of a cent can cost thousands of dollars quite quickly.
Managerial accounting is essential for decision making. Making the best choice depends on the manager's goals, the anticipated results from each alternative, and the information available when the decision is made (Schneider, 2012). The different techniques associated with managerial accounting are very helpful in the decisions that need to be made. In order to truly understand decision making with managerial accounting one must first discern exactly what managerial accounting means and some of the techniques associated with it. The definition of managerial accounting will be discussed along with the techniques of cost management techniques, budgeting, and quality control.
“Companies can choose to use the accounting job order costing method when they have a single product line or numerous products to manufacture. However, it is less costly and less time-consuming if they elect to use process costing when calculating the manufacturing of a single product line. With similarities
Under an ABC system, the allocation of costs to products is achieved through at least four analytical steps. Firstly, costs are grouped into activity levels. Secondly, cost drivers are
An in depth analysis of the current costing methods used by the beverage distribution company, Johnson Beverage Inc.
In order for a company to succeed and be successful, it is very important for the company to understand the difference between profit and cost of goods. There are costing tools that can help a business figure out what the cost of product is during the manufacturing process. These tools are beneficial for a company to figure out how much profit can be made. These tools take the cost of manufacturing the unit and subtract it from the sale price of the product. Having this information, the profit per unit, is very beneficial for a company to know which products they should produce more heavily, or which ones to eliminate. I want to discuss two costing methods that are beneficial to a
User friendly- Process costing is relatively easier to use compared to job costing or activity based costing. It collects the overall costs from each department and ignores costs related to specific jobs within a department. This can therefore reduce the volume of data, and makes data collection easy and quick for Nestle. The analysis of data is straightforward, does not requires basic accounting skills and does not waste Nestle’s time and resources. Nestle can allocate business costs according to the number of processes each
Process costing is an easier system to use when costing homogenous products compared to other cost allocation methods. Each process applies direct materials, labor and manufacturing overhead to the production cost total. Management accountants take the total number of goods leaving the process and divide the total process cost by this number. This creates a simple average cost for each item produced. Another advantage is that business owners use process costing because it creates a flexible production process. Companies needing to refine their process can simply add or remove a process as necessary. This also allows companies to lower their production cost for each good. Adding a process allows companies to produce slightly different goods or improve product quality. This flexibility ensures companies can produce at the most competitive cost in the economic marketplace. Also process costing provides an approach to allocate costs to
By reducing the introduction of new products, cost such as product development, R&D and advertising can be avoided.
INTRODUCTION Businesses – from manufacturing, merchandising and service industries alike – take careful consideration in the analysis of their costing systems in order to be able to set up competitive prices in the market. Misallocation of costs may lead to incorrect price estimates, continuous production of unprofitable products, and ineffective processing schedules. In this case study, we will discuss the costing methods which Zauner Ornaments have used or is currently using and, in conclusion, be able to distinguish the advantages and disadvantages of each costing method. CASE CONTEXT The case seeks to assist Zauner’s comptroller, Yu Chia-yi, in determining the best costing method for their overhead costs. In addition we also aim to
It consists of weighting and combining the weights of the ten factors and to evaluate implementing ABC. The potential benefits of ABC can be analyzed in advance along two separate dimensions. And there are ten mediating factors (Pricing Diversity, Support Diversity, Common Processes, Cost Allocation, Growth of Indirect Costs, Pricing Freedom, Fixed Expense Ratio, Strategic Considerations, Cost Reduction Effort, Analysis Frequency) can guide management in determining the answers. The fist five factors (PD, SD, CP, CA, FG) based on the probability. The second dimension of the model seeks to establish decisions. lY axis potential for ABC due to cost distortion---PD.SD.CP.CA.FG lX axis proclivity to use cost information in decision---PF.FE.SC.CR.AF To start management must analyze and responses to two key questions: 1. For a given organization, is it likely that ABC will produce costs that are significantly different from those that are generated with conventional accounting, and does it seem likely that those costs will be "better"? 2. If information that is considered "better" is generated by the system, will the new information change the dependent decisions made by the management? After finish these questions managers of company can discuses the ten factors that support or reject implementation. Finally, the combined weighted scores are plotted as a point on one of the four quadrants of a graph.Plotting the Answers--- Use Contingency Grid Method The steps in the
Process costing is a system which mostly practices by a company whereby the manager of the company wants to know the cash flow from one department to another. Process costing give a clarify information to managers, therefore this activities is very important.
Management accounting is one important area which is widely used in many industries and areas. The application of management accounting theories, methods, tools and principles could influence one company’s decision making process, evaluation process, performance estimation and investment management. This report will emphasize two important areas which are investment appraisal and variance analysis which are used to make the decision and estimation. For investment appraisal methods, the internal variables and external variables will have the specific influenced on the capital investment appraisal methods, especially the CIAM methods. However, the investment appraisal process has faced difficulties when the company needs to examine the investment related with the IS services and IT system. The application of variance analysis in the companies and agencies and the connection between risks and incentives. The using of variance analysis could provide some extra information post-contract and pre-decision. The old assumptions used in the variance analysis are not available again today because they have test the previous model and find the new evidences to reduce the errors in the calculation and improve the model. There are many limitations connected with both the variance analysis and investment appraisal. With the development of the accounting research and innovation in the business, it is certain that in the future, more and more new methods, models and
In this assignment, is to study Coca-Cola to evaluate the Coca-Cola with the Performance Management and Appraisal.
To summarise the above points we know that Bata is the fastest growing footwear brand in the country with a presence across 400 cities. The brand offers a wide range of comfortable, stylish and trendy footwear at affordable prices, ensuring there is something in the collection for everyone. The USP of the
If a product passes through different stages, each distinct and well defined, it is desired to know the cost of production at each stage. In order to ascertain the same, process costing is employed under which a separate account is opened for each process.