Accounting

PRODUCTS AND OPERATIONS IN COCA COLA

As stated earlier, Coca Cola Company is one of the biggest companies which produce nonalcoholic beverages. It produces around 11,000 bottles each second and it is responsible for producing more than 80 drinks in different markets globally (Tiger, et al., 2017). The company not a single entity, therefore, operating through multiple local channels. During the production of these soft drinks, the company incurs various costs.  These costs include;

The conversion costs- these are the cost which is incurred during the conversion of raw materials into the finished product.

Spoilage cost- these are the costs which are incurred when there is spoilage during the production. This includes the dented cans and spillage.

Advertising and marketing cost- these are the costs that the company uses for the advertisement of the company and the products and services.

Joint costs- joint costs come in when the company produces two or more products through the same production process using a common raw material.

Transferred in cost- these are the costs which are associated with physical units which are accumulated during the previous processing center.

These costs can be categorized either direct or indirect cost. The costs which are direct can be traced to the specific good production or the service (Marshall, et al., 2016).  On the other hand, indirect cost is the costs which are necessary to keep the business operating.  In our case, spoilage cost, joint cost, transferred in cost, and the conversion cost all fall under the direct cost. This is simply because all of these costs are directly involved in the whole process of production and they are incurred in the process of producing the final product.  On the other hand, advertising and marketing cost falls under the indirect cost. This is because the cost is not directly involved in the production but essential to the company.

 

References

http://iml.jou.ufl.edu/projects/spring08/Cantwell/how.html

Marshall, D., McCarthy, L., McGrath, P., & Harrigan, F. (2016). What's your strategy for supply chain disclosure?. MIT Sloan Management Review, 57(2), 37-45.

Tiger, A. A., Nance, W., Roach, C., & Emery, B. G. (2017). What's All the Fuzz About? A Teaching Case Study on the Use of Coca-Cola Freestyle Machines in Quick-Service Restaurants. Journal of Marketing Development and Competitiveness, 11(2), 17-26.