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Coca Cola Annual Review

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Accounting
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Grantham University
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Running Head: COCA COLA ANNUAL REVIEW 1
Coca Cola Annual Review
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COCA COLA ANNUAL REVIEW 2
1. In your opinion, are Coca-Cola’s marketing expenditures a fixed cost, variable
cost, or mixed cost? Give justification for your answer.
Coca-Cola Company's expenditures on marketing, in our judgment, are a mixed cost.
According to the concern, "increases in cost of sales in the previous two years have been
principally attributed to increasing marketing expenses to facilitate the growth of the
company's sales volume (Coca Cola, 2021). From such point of view, it is justified that the
company spends more money on marketing and selling as a way of achieving increases sales
volume. However, marketing expenses are indirectly proportionate to revenue because other
variables impact the number of units sold. As a result, it is not a purely variable expense.
Moreover, the link between expenditure on marketing and sales means that it is also not a
fixed expense (Loft, 2020). As a result, marketing expenses may be best managed as a mixed
cost, with both fixed and variable components of costs associated with marketing.
Expenses related to the sale of its products can be classified as variable costs since, it
varies depending on the volume of sales made. Therefore, the more advertising campaign
costs the company incur, the more the sales volume. These variables cost of marketing
include cost of running advertisements on electronic media and commission paid to sales
representatives based on sales volume (Loft, 2020). On the other hand, the s alary payments
to salespeople, on the other hand, are fixed expenditures because they remain constant
irrespective of the volume of sales made.
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?
Sweeteners and packaging expenses are variable costs for Coca-Cola because the
company's principal business is the production and sale of syrup to bottlers. As a result, the

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Running Head: COCA COLA ANNUAL REVIEW Coca Cola Annual Review Name Institution Course Date 1 COCA COLA ANNUAL REVIEW 2 1. In your opinion, are Coca-Cola’s marketing expenditures a fixed cost, variable cost, or mixed cost? Give justification for your answer. Coca-Cola Company's expenditures on marketing, in our judgment, are a mixed cost. According to the concern, "increases in cost of sales in the previous two years have been principally attributed to increasing marketing expenses to facilitate the growth of the company's sales volume (Coca Cola, 2021). From such point of view, it is justified that the company spends more money on marketing and selling as a way of achieving increases sales volume. However, marketing expenses are indirectly proportionate to revenue because other variables impact the number of units sold. As a result, it is not a purely variable expense. Moreover, the link between expenditure on marketing and sales means that it is also not a fixed expense (Loft, 2020). As a result, marketing expenses may be best managed as a mixed cost, with both fixed and variable components of costs associated with marketing. Expenses related to the sale of its products c ...
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