Coca Cola Evaluation

2581 Words May 29th, 2011 11 Pages
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.

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