Accounting

Smart water is one of the products that the company manufactures, then process costing is the most favorable accounting system that the company could use for this product as well as the other beverage products. The fact that the company’s products are indistinguishable, process costing accounting system is suitable as the processes are almost identical and the products as well produced in high quantities. Furthermore, the coca cola products are produced on a continuous basis and for a very long period. It is not a short term process. The different stages in the coca cola product production process direct its nature of accounting to the one stated above. (Smith, 2017)

This type of accounting helps them track the cost of production in different on their beverages. There are four major stages that are involved in the production of the coca cola company beverages. The first stage involves mixing and blending of the flavors and all ingredients from which the process goes ahead for the bottling.  The third stage is composed of three parts; inspection, labeling, and packaging. This is the final stage of the production before the products are transported to the warehouse where the counts are recorded in the finished goods inventory. From that point the products can then be sold to the appropriate retail stores then the product costs are then recorded in the inventory that contains the goods sold cost.

Process costing accounting system is appropriate for these companies that produce identical products in batches. The accounts are therefore easier to account for based on different stages that are involved as there is a consistent process that is followed. In this case, different work-in-progress books are used whereby each stage or department accounts for the operations that they undertake. The product cost for the products are assigned based on departments and therefore is right to conclude that The Coca Cola Company can get its unit cost information from the report that is given the different departments. Particularly, Standard costs can be used in this case. For process costing, standard costs are assigned to production units and are effective for companies that use a broad mix of products.

The coca cola company does not only major on sweetened water but also other drinks such as Fanta, sprite, coca cola both the sugarless and the one that got sugar and so many other varieties. In such cases, the difficulty of giving an actual cost to each type of product is experienced. In such cases, the processes may need standard costs and this accounting method remains effective to ensure that no mix up of products. The standard costs, in this case, are assigned to production units depending on the varieties of beverages and the totals are finally compared to the actual accumulated costs. (Weygandt, 2015)

 References

Hannah, L. (2015). A global corporate census: publicly traded and close companies in 1910. The Economic History Review, 68(2), 548-573.

Smith, S. S. (2017). Sustainability: How Accountants Can Add Value and Deliver Results. Management Accounting Quarterly, 19(1), 19.

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & managerial accounting. John Wiley & Sons.