A STUDY ON PROCESS COSTING OF COCA COLA LIMITED.

A PROJECT SUBMITTED TO
UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF THE
DEGREE OF MASTER IN COMMERCE
UNDER THE FACULTY OF COMMERCE

BY

YOGIRAJ GORAKHNATH DONGARE

UNDER THE GUIDANCE OF

DR. SHILPA ABHAY PALANDE
ASSISTANT PROFESSOR

V. G. VAZE COLLEGE OF ARTS, SCIENCE AND COMMERCE

(AUTONOMOUS) MITHAGHAR ROAD, TATA COLONY, MULUND
(EAST)
MUMBAI 400081

SEMESTER IV 2022-23

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 THE KELKAR EDUCATION TRUST'S
VINAYAK GANESH VAZE COLLEGE

OF ARTS, SCIENCE & COMMERCE (AUTONOMOUS)

MITHAGAR ROAD, MULUND (EAST), MUMBAI 400 081.

Certificate

This is to certify that

MR. YOGIRAJ GORAKHNATH DONGARE of M. Com. (Advanced

Accountancy) Semester IV has undertaken & completed the project work titled
A STUDY ON PROCESS COSTING OF COCA COLA LIMITED. during the
academic year 2022-23 under the guidance of Dr. Shilpa Abhay Palande
Submitted 27 March 2023 to this college in fulfillment of the curriculum of
Master of Commerce (Advanced Accountancy) University of Mumbai.

PROJECT COURSE EXTERNAL PRINCIPAL

GUIDE CO-ORDINATOR EXAMINER

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 DECLARATION BY LEARNER

I the undersigned Miss / Mr. Yogiraj Gorakhnath Dongare here by, declare that
the work embodied in this project work titled “A STUDY ON PROCESS
COSTING OF COCA COLA LIMITED. ”, forms my own contribution to the
research work carried out under the guidance of Dr. Shilpa Abhay Palande
is a result of my own research work and has not been previously submitted to
any other University for any other Degree/ Diploma to this or any other
University. Wherever reference has been made to previous works of others, it
has been clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical conduct.

Name and Signature of the learner

Certified by
Name and signature of the Guiding Teacher

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 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the
depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance
to do this project.

I would like to thank my Principal, Prof. Dr. Preeta Nilesh ma’am for
providing the necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator CA Anil Naik Sir, for his
moral support and guidance.

I would also like to express my sincere gratitude towards my project guide,

Dr Shilpa Abhay palande whose guidance and care made the project
successful.

I would like to thank my College Library, for having provided various

reference books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my Parents and Peers who
supported me throughout my project.

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 Executive Summary

The process costing system is a vital tool used by manufacturing companies to

determine the cost of production for a particular period. Coca-Cola Limited, one
of the world's leading soft drink manufacturers, uses this costing system to
allocate production costs to its products.

Coca-Cola Limited's process costing system involves several stages, including

the acquisition of raw materials, processing, bottling, and packaging. The
company incurs various costs in each of these stages, including direct materials,
direct labor, and overhead costs.

The company uses a weighted average costing method to allocate costs to its
products. This method calculates the average cost of all the units produced
during a specific period and then divides the total cost by the number of units
produced.

Coca-Cola Limited's process costing system allows the company to determine

the cost per unit of each product, which helps in setting appropriate prices for
their products. It also helps in identifying inefficiencies in the production
process and provides insights into areas where the company can cut costs.

Overall, Coca-Cola Limited's process costing system is an effective tool that

helps the company manage its production costs efficiently, allowing it to
maintain its position as one of the world's leading soft drink manufacturers.

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 INDEX

Chapter Title Page

No.

Chapter No. 1 INTRODUCTION

1.1 Introduction of Process Costing

1.2 Historical Background
1.3 Brief Profile Of Study Area
1.3.1 Process Costing: Explanation
1.3.2 Characteristics of Process Costing
1.3.3 Features of Process Costing
1.3.4 Use of Process Costing
1.3.5 Process Costing Procedure
1.3.6 Advantages Of Process Costing
1.3.7 Disadvantages Of Process Costing
1.3.8 Types of Process Costing

Chapter No. 2 REVIEW OF LITERATURE

2.1 Introduction
2.2 Review of studies

Chapter No. 3 RESEARCH

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 METHODOLOGY

3.1 Meaning & Definition

3.2 Objective of the Study
3.3 Hypothesis
3.4 Scope of Study
3.5 Limitations of Study
3.6 Significance of Study
3.7 Selection of Problem
3.8 Sample Size
3.9 Data Collection
3.10 Techniques & Tools to be used

Chapter No. 4 DATA ANALYSIS AND

INTERPRETATION
4.1 Meaning & Importance of Data
Analysis
4.2 Analysis of Data

Chapter No. 5 CONCLUSION AND

FINDINGS

5.1 Findings
5.2 Conclusion
5.3 Suggestion

BIBLIOGRAPHY

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1.1 INTRODUCTION

Process costing is an accounting methodology that traces and accumulates direct costs, and
allocates indirect costs of a manufacturing process. Costs are assigned to products, usually in
a large batch, which might include an entire month's production. Eventually, costs have to be
allocated to individual units of product. It assigns average costs to each unit, and is the
opposite extreme of Job costing which attempts to measure individual costs of production of
each unit. Process costing is a type of operation costing which is used to ascertain the cost
of a product at each process or stage of manufacture.Process costing is suitable for industries
producing homogeneous products and where production is a continuous flow. A process can
be referred to as the sub-unit of an organization specifically defined for cost collection
purpose.

The importance of process costing Costing is an important process that many companies
engage in to keep track of where their money is being spent in the production and distribution
processes.

Understanding these costs is the first step in being able to control them. It is very important
that a company chooses the appropriate type of costing system for their product type and
industry. One type of costing system that is used in certain industries is process costing that
varies from other types of costing (such as job costing) in some ways. In Process costing unit
costs are more like averages, the process-costing system requires less bookkeeping than does
a job-order costing system. So, a lot of companies prefer to use process-costing system. In
process costing it is the process that is costed (unlike job costing where each job is costed
separately). The method used is to take the total cost of the process and average it over the
units of production.

Cost per unit. = Cost of inputs

Expected output in unit

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With process costing, companies determine item cost by tracking the cost of each stage in the
production process, instead of tracking costs for each individual item. After adding up the
cost of all the steps in the process, they divide the total cost by the number of items. This is
called the cost per unit. For example, a paper company might track the cost of each stage in
the process of turning wood pulp into reams of paper, then divide the total cost by the number
of reams to get the cost per ream.

Process Costing Explained

Homogeneous items are products that cannot be distinguished from one another — for
example, a bin of screws of the same size and type. These similar products all generally flow
through a number of stages during the production process. To use the process costing
approach to accounting, companies determine the direct costs and manufacturing overhead
for each of those stages.

These stages include direct and indirect costs. Direct costs are those directly incurred for
production, such as raw materials and machine operators’ wages. Overhead often includes
indirect costs such as equipment maintenance and facility rent, as well as the wages of
administrative staff who aren’t directly involved in making the products.

Companies often break down these costs into direct materials and conversion costs. Direct
materials are the materials consumed at each stage; conversion costs are process-related costs
such as payroll and manufacturing overhead.

At many companies, a different department handles each stage in the production process.
Each department prepares a report that details its direct materials, direct labor and
manufacturing overhead costs. The company then aggregates these reports to analyze total
product cost.

DEFINITION OF PROCESS COSTING:

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CIMA defines process costing as "The costing method applicable where goods or services
result from a sequence of continuous or repetitive operations or processes. Costs are averaged
over the units produced during the period".
A process costing system accumulates the costs of a production process and assigns them to
the products that the business outputs. A production report has to be made under the process
costing system.
Process costing is applied to determine the cost of production in industries where products
pass through different phases of production before completion.

Under process costing, there is a finished product at each stage. This becomes the raw
material of the subsequent stage until the final stage of completion.

Process costing is generally used in industries that deal with chemicals, distilled products,
canned products, food products, oil refineries, edible oils, soap, paper, textiles, and others.

1.2 HISTORICAL BACKGROUND

Process costing is alive and well and is in use in industries where homogenous products are
manufactured, or where a common process is applied, either in continuous or in batch
operations. From an examination of the somewhat limited literature on process costing it is
clear that by the beginning of the 20th century general practice had evolved to include the
cascading of actual costs from one process to the next in sequence, and the inclusion of the
equivalent units of partly completed work within process inventory. That approach became
enshrined in textbook treatment of the topic. Research carried out towards the end of the 20th
century shows that actual costs had been supplanted by standard costs; that the cascading was
no longer done; and that the equivalent units calculation had been discontinued. Tragically,
the textbook content has failed to keep pace with these developments, and textbooks now
teach a version of process costing that has no relation to current practice. Because the
textbooks are all out of date, the teaching that they support is also out of date.

1.2.1 History of coca cola ltd

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Coca-Cola Enterprises, established in 1986, is a young company by the standards of the
Coca-Cola system. Yet each of its franchises has a strong heritage in the traditions of
Coca-Cola that is the foundation for this Company. The Coca-Cola Company traces its
beginning to 1886, when an Atlanta pharmacist, Dr. John Pemberton, began to produce
Coca-Cola syrup for sale in fountain drinks. However the bottling business began in 1899
when two Chattanooga businessmen, Benjamin F. Thomas and Joseph B. Whitehead, secured
the exclusive rights to bottle and sell Coca-Cola for most of the United States from The
Coca-Cola Company.The Coca-Cola Company is the largest manufacturer, distributor and
marketer of non-alcoholic beverage concentrates and syrups in the world. Finished beverage
products bearing coca cola trademarks, sold in the United States since 1886, coca cola are
now sold in more than 200 countries. Along with Coca-Cola, which is recognized as the
world’s most valuable brand, coca cola market four of the world’s top five non-alcoholic
sparkling brands, including Diet Coke, Fanta and Sprite. The Coca-Cola Company and all
entities included in coca cola consolidated financial statements. coca cola business is
non-alcoholic beverages principally sparkling beverages, but also a variety of still beverages.
Coca cola manufacture beverage concentrates and syrups, which coca cola sell to bottling and
canning operations, fountain wholesalers and some fountain retailers, as well as some
finished beverages, which coca cola sell primarily to distributors. coca cola Company owns
or licenses more than 400 brands, including diet and light beverages, waters, juice and juice
drinks, teas, coffees, and energy and sports drinks. In addition, coca cola have ownership
interests in numerous bottling and canning operations, although most of these operations are
independently owned and managed. Coca cola were incorporated in September 1919 under
the laws of the State of Delaware and succeeded to the business of a Georgia corporation with
the same name that had been organized in 1892.coca cola Company is one of numerous
competitors in the commercial beverages market. Of the approximately 52 billion beverage
servings of all types consumed worldwide every day, beverages bearing trademarks owned by
or licensed to us account for more than 1.4 billion. Coca cola believe that coca cola success
depends on coca cola ability to connect with consumers by providing them with a wide
variety of choices to meet their desires, needs and lifestyle choices. coca cola success further
depends on the ability of coca cola people to execute effectively, every day. coca cola goal is
to use coca cola Company’s assets our brands, financial strength, unrivaled distribution
system, and the strong commitment of management and employees to become more
competitive and to accelerate growth in a manner that creates value for coca cola
shareowners. coca cola business is non-alcoholic beverages principally sparkling beverages,

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but also a variety of still beverages. Coca cola manufacture beverage concentrates and syrups,
which coca cola sell to bottling and canning operations, fountain wholesalers and some
fountain retailers, as well as some finished beverages, which coca cola sell primarily to
distributors.
In addition, coca cola have ownership interests in numerous bottling and canning operations,
although most of these operations are independently owned and managed.

1.3 BRIEF PROFILE OF STUDY AREA

1.3.1 Process Costing: Explanation

Process costing refers to a type of costing procedure commonly adopted by factories. In

process costing, there is continuous or mass production and ongoing costs, which are
accumulated regularly.

The following five conditions are favorable for the use of process costing:

● Production of a single output in a plant.

● Division of a plant into different processes and departments. Each process is

responsible for the manufacture of a single product.

● Processing a single product for a scheduled time, followed by successive runs of other
products. Here, costs are calculated separately for each run.

● Production of several products that are produced simultaneously from the same
process.

● Division of a factory into separate operations, each performing standard protocols and
procedures.

1.3.2 Characteristics of Process Costing

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The main characteristics of process costing are:

● Continuous production.

● The end product is the result of a sequence of processes.

● Homogeneous products with identical and standardized features ensure quality.

● The processing sequence is specific and predetermined.

● The finished products outputted from one process are used as the raw materials for the
next process, which happens until completion.

● Costs are calculated process-wise.

● General Principles of Process Costing

● The following are the general principles of process costing:

● All expenses direct and indirect are accumulated and classified according to the
process.

● Process-wise records are maintained, including those relating to the quantity of

production, scrap, wastage, etc.

● To determine the average cost per unit for the period, the total cost of each process is
divided by the total production.

● The cost of the process is transferred along with the transfer of the product to another
process.

● Production and inventories are computed in terms of completed products.

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 ● The cost of normal spoilage, wastage, etc. is included in product cost.

● Costs are calculated process-wise.

● General Principles of Process Costing

● The cost of normal spoilage, wastage, etc. is included in product cost.

1.3.3 Features of Process Costing

The main features of process costing include:

● Production is divided into various stages (known as processes) and each process is
carried out by separate cost centers or departments.

● Production is continuous and the final product or end product is the result of a
sequence of processes or operations.

● The finished product of each process is treated as the raw material for the subsequent
process.

● The units of the commodity produced are homogeneous and identical in nature.

● The cost of production per unit is the average cost, which is obtained by dividing the
total process cost by the total number of units manufactured.

● The sequence of processes and operations employed is pre-determined.

● There is an indispensable loss in the production process ("normal loss"). This may be
due to the qualities of the material used for production (e.g., losses from evaporation).

● The normal loss is absorbed by the cost of good units.

● The processing of raw material may lead to joint products and by-products.

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 ● Abnormal losses and gains may occur. These are treated separately under process
costing.

● Inter-process profits are also kept in mind when transferring the output at market price
to another process. This indicates the market price and can be helpful to identify
inefficiencies and losses in a process.

● The concept of equivalent production is also considered under process costing. Under
this concept, when some units are in the semi-finished stage, they should be expressed
in terms of equivalent completed units or effective units.

● Profit and loss are calculated after considering the opening and closing balances of
finished stock. Process accounts are helpful for the valuation of raw materials,
work-in-progress, and finished goods. Stocks are shown in the balance sheet.

● To summarize, W. Big offered an informative remark:

● The fundamental principle involved in process cost accounts is simple. A separate

account is opened for each process ... to which all expenditure incurred thereon is
charged.

● The author continued:

● When the process or operation has been completed, the partially worked out product
is passed into a process stock account, from which it will be requisitioned as and
when required by the next process; or it may become automatically the raw material
of the next process and be charged to the process account immediately.

1.3.4 Use of Process Costing

Process costing is the logical choice for keeping tabs on product costs in industries where the
individual units of output are uniform and individually not worth a great deal such as reams
of paper or bottles of soda and where it’s impossible or difficult to trace production costs for

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each individual unit. Instead, the cost of goods manufactured (COGM) is produced using
process costing.

This usually appears on your income statement.

1. Monitor profit margins:

For industries that sell in high volume and operate with narrow profit margins, even a slight
change in process costs can make a big difference to a company’s profit. Process costing
enables companies to home in on the cost of each production stage and target specific
departments for improvement.

2. Inventory control:
Depending on the type of business, you may be required to report inventory to the IRS for tax
purposes. For large companies producing thousands or even millions of products, this can be
a difficult task. However, process costing can help simplify it. Each item produced is valued
and each department tracks things like materials purchased.

3. Uniformity in reporting:
With process costing, each department will track their own costs and all
those will be rolled up to arrive at an overall cost to produce a specific number of items.
Because all expenses have to be added together, they all need to be reported in the same
manner and with the same cost codes. This helps bring uniformity to reports and makes it
easier to track costs over time.

1.3.5 Process Costing Procedure

● Under process costing, the procedure used to manufacture a product is divided into
well-defined processes. A separate account is opened for each process to which all
incurred costs are charged.

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 ● The total number of units produced during a given period is calculated. By dividing
the total cost of a process by the total number of units produced, the cost per unit can
be obtained.

● The finished material of one process constitutes the raw material of the next.
Therefore, as the finished material is transferred to the next process, the cost of each
process is also transferred, until it ends in the finished stock account.

● Calculating Unit Cost Under Process Costing

● Calculating the unit cost for any work performed during a period is a key part of a
production report.

● A student’s first thought is that this is easy just divide the total cost by the number of
units produced. However, the presence of work-in-process inventories causes
problems.

● You cannot calculate the total output of the period by just taking the sum of completed
units and work in process (ending inventory) because units in the work-in-process
inventory are not 100% complete.

This problem is handled through the concept of equivalent units of production. The process
costing procedure is explained in more detail in the next example.

Example

A product passes through three processes: Process A, Process B, and Process C. 1,000 tons of
the commodity were produced at the following costs:

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Required: Assume that there was no work-in-progress (i.e., not at the beginning or at the
end). Show the process costs for each process and the total cost of the finished product.

Solution

Process A Account Cost per unit = Cost of input / Output = $6,000 / 1,000 tons = $6 per ton

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Process B Account Cost per unit = $15,000 / 1,000 tons = $15 per ton

Process C Account Cost per unit = $27,000 / 1,000 tons = $27 per ton

1.3.6 Advantages Of Process Costing

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1. Simple to use

In comparison to certain other cost allocation techniques, process costing is simpler to utilise
when pricing homogeneous items, which is one of its key benefits. The amount of production
system procedures that each thing goes through determines how much money business
owners allocate for those operations. Direct materials, labour, and manufacturing overhead
are added to the overall production cost during each procedure. Management accountants
divide the overall cost of the process by the total quantity of commodities that exit the
process. This yields a straightforward average cost for every product produced.

2. Flexible

Process costing is used by business owners because it results in a flexible manufacturing

process. Businesses that need to improve their processes can easily add or delete a procedure
as needed. Additionally, it enables businesses to minimise the cost of producing each
commodity. To boost cost reductions, business managers frequently seek ways to improve
production processes. Getting rid of duplicate procedures frequently accomplishes this.
Companies can make slightly different things or raise the caliber of their products by adding
a procedure. If any cost reductions are possible in the production system, management
accountants may examine the number of materials and labour required in each step. This
flexibility makes sure businesses may manufacture at the most affordable price in the market.
3. Quick Assessment

Step costing aids in the quick assessment of costs for each process and the finished product.
Unit costs may be quickly established even at monthly or weekly intervals if overhead rates
are specified.

4. Uniformity

When the production processes are standardised, the average cost may be simply estimated.
The uniformity of procedures enables quicker submission of price quotes.

5. Cost-effective

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It costs less and requires less administrative effort than job costing. Finding costs is less
complicated and expensive.

6. It is simple to allocate costs and establish precisely how much each procedure costs.

7. Standard costing systems are quite useful for process costing.

8. The accessibility of cost information in the manner of quick and precise cost reports
facilitates performance assessment and managerial control to a larger extent.

1.3.7 Disadvantages Of Process Costing

1. Cost inefficiencies

The possibility of costly mistakes building up in the production process is one of the
drawbacks of process costing. Cost accounting systems sometimes suffer from severe
disadvantages due to production cost inaccuracies. Direct allocation is not used in process
costing to allocate company expenses to specific products. Applying a particular quantity of
manufacturing overhead, production labour, and raw materials to products or services are
known as direct allocation costing.
Non-production costs could be able to be accounted for in the overall process cost thanks to
process costing. The cost of each item will be arbitrarily increased by including
non-production charges; this also raises the price of the final product for consumers.
Production expenses may sometimes be omitted by management accountants, resulting in
under-priced goods. Because under-costed items are more costly than claimed, businesses
often make less money.

2. Comparable units

When using the process costing methodology, management accountants must determine
comparable units. At the end of the accounting period, the number of unfinished items still in
process is represented by equivalent units. Management accountants may only be using this
figure as a best guess or an approximation. On a company's balance sheet, this information is

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listed as work-in-process. Totals for finished goods may be misrepresented as a result of
inaccurate work-in-process accounting. As a result, controlling inventory and figuring out
how many items the business needs to offer in the marketplace become challenging tasks.

3. Cost Error

Among the limitations of process costing are the cost errors that can accrue in the production
system. Production cost errors often represent a significant disadvantage for cost accounting
systems. Process costing does not use direct allocation to apply business costs to individual
goods. Direct allocation costing applies a specific amount of raw materials, production labor
and manufacturing overhead to goods or services.
Process costing may allow non-production costs to be included in the total process cost.
Including non-production costs will arbitrarily increase each item’s cost; this also increases
the consumer product price. Management accountants may also leave out production costs
and create under-costed products. Under-costed products usually result in lower business
profits because goods are actually more expensive than actually reported.

4. Equivalent Units

Management accountants must calculate equivalent units in the process costing system.
Equivalent units represent the amount of unfinished goods left in a process at the end of an

accounting period. This calculation may only be a best guess or an estimate by management
accountants. This information is reported as the work-in-process on a company’s balance
sheet. Inaccurate work-in-process accounts may also result in distorted finished good totals.
This creates a difficult process for managing inventory and determining how many products
the company has to sell in the open marketplace.

5. The basis for process costing is historical cost. Future management decision-making may
not benefit from the cost data now accessible.

6. After the period, incomplete units (work in progress) are stated in comparable production
units. This adds a subjective component to the analysis of costs in science.

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7. Average costs are the foundation of the process costing system as a whole. Average prices
might not necessarily represent actual prices. A mistake in cost estimation in one process will
have an impact on cost estimation in the following processes, the price of work-in-progress,
and the price of finished goods.

8. When two or more items are created using the same method, the joint expenses are divided
among them according to some weight, such as several points. Point-based weighting is a
subjective choice that will result in approximative cost and cannot be relied upon. The
process costing is insufficient for management objectives due to the lack of a scientific
foundation.

9. The process costing approach assumes that a factory's manufacturing activity is segmented
into processes. A workflow is an organisational unit or division inside a business where a
particular, repetitive activity is carried out. As a result, a process becomes a useful unit for
production management but frequently a subpar unit for cost accounting.

1.3.8 Types of Process Costing

1. First In First Out Method [FIFO]

2. Average Method
3. Weighted Average Method

1.First In First Out Method [FIFO]

In this method, the assumption is that the incomplete units from the opening stock are
completed first and then the units introduced in the process are completed. The costs added in
each process during the current period is prorated to the production necessary to complete the
opening work in progress, to complete the units added in the process and units in the work in
progress.

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The objective of the first in first out method is to value the inventory at the current costs and
as such the main problem is to calculate the equivalent production under this method.

2. Average Method
Process costs are sometimes computed on the basis of average costs. Where degree of
completion of opening work in progress is not given, average method is used.

The average process cost is obtained by adding the cost of opening work in progress and the
cost of units introduced in the process during the current period and dividing this total cost by
total equivalent units obtained by adding the number of units completed and equivalent units
of the closing work in progress of each element, material, labor and overheads.

The main object of average method is to even out the fluctuations in prices and hence is used
when the prices fluctuate widely during a particular period.

3. Weighted Average Method

If a manufacturing unit is manufacturing two or more products, which are quite dissimilar to
each other, weighted average method is used. Under this method, weighted average is
computed and used in valuation of the incomplete units.

CHAPTER 2:- REVIEW OF LITERATURE

Introduction

A Literature Review is "a systematic, explicit, and reproducible method for identifying,
evaluating, and synthesizing the existing body of completed and recorded work produced by
researchers, scholars, and practitioners.

"In simple terms, it is a comprehensive summary on a previous research topic. A literature

review creates a "landscape" for the reader, giving her or him a full understanding of the
developments in the field. This landscape informs the reader that the author has indeed

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assimilated all (or the vast majority of) previous, significant works in the field into her or his
research. It is the process of going through the articles related to the topic of research topic,
which are published in journals, online data bases, magazines, newspapers, book, any other
source of information including online sources.

Following is few Literature Reviews:

An Econometric Analysis Of Brand-Level Strategic Pricing Between Coca-Cola

Company And Pepsico.

By Tirtha Dhar, Jean-Paul Chavas, Ronald W. Cotterill, Brian W. Gould

We investigate market structure and strategic pricing for leading brands sold by Coca-Cola
Company and PepsiCo. in the context of a flexible demand specification (i.e., nonlinear
AIDS) and structural price equations. Our flexible and generalized approach does not rely
upon the often used ad hoc linear approximations to demand and profit-maximizing
first-order conditions, and the assumption of Nash-Bertrand competition. We estimate a
conjectural variation model and test for different brand-level pure strategy games. This
approach of modeling market competition using the nonlinear Full Information Maximum
Likelihood (FIML) estimation method provides insights into the nature of imperfect
competition and the extent of market power. We find no support for a Nash-Bertrand or
Stackelberg Leadership equilibrium in the brand-level pricing game. Results also provide
insights into the unique positioning of PepsiCo.'s Mountain Dew brand.

Factors Influencing Strategic Change Management Practices At Coca Cola Company In

Kenya

Strategic change is the transition that results from the implementation of organization
strategy. Managing strategic change is about managing the unfolding non-linear dynamic
processes during strategy implementation. There have been extreme changes in the
competitive forces in the global and domestic markets. Effective strategic change
management has become essential for the survival of any company in Kenya. There has been
pervasive change in the Kenyan economy, as business organizations operate in a dynamic,
turbulent and constantly increasing competitive environment. The purpose of the study was to

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investigate the influence of strategic change management practices at Coca Cola Company in
Kenya.

The study was guided by three step theory of change, force field analysis theory and Kanter
model of change management. The research was undertaken through a case study. Primary
data was collected using an interview guide which was administered to strategic manager of
Coca Cola Company headquarters at Upper hill. In order to collect primary data, interview
guide was designed with 20 questions to establish the factors influencing strategic change
management practices at Coca Cola Company in Kenya. Data collected was analyzed using
content analysis techniques. From the research findings, the study revealed that globalization
has increased the company’s markets and opportunities for more growth and revenue. The
findings also revealed that, for any business to grow and prosper, managers of the business
must be able to anticipate, recognize and deal with change in the internal and external
environment. The study found that the intent of process reengineering is to make Coca Cola
Company in Kenya significantly more flexible, responsive, efficient, and effective for its
customers, employees and other stakeholders.

The study further revealed the challenges faced by the company as resistance to change, poor
communication, lack of adequate resources and funding, ineffective management support and
incompatibility of the new change with existing organization structure, information
technological innovations, political interference, social factors and consumer behaviour. The
study concluded that strategic change is long term in nature, affects the entire organization
and aims at achieving effectiveness. Therefore, the company must strive to adapt strategic
change management practices in order to cope with todays environmental changes which are
at a high rise. The study recommends that all the employees and managers in the company
should own the process of change. They should make sure that they do not oppose change for
the sake of it, but seek to identify the positive effects of such change. It also recommends that
the company need to be proactive in its operations by initiating the required change that could
give them a competitive edge.

Inventory Management: A Tool of Optimizing Resources in a Manufacturing Industry

A Case
Study of Coca-Cola Bottling Company, Ilorin Plant

26
Inventory constitutes the most significant part of current assets of larger majority of Nigerian
manufacturing industries. Because of the relative largeness of inventories maintained by most
firms, a considerable sum of an organization’s fund is being committed to them. It thus
becomes absolutely imperative to manage inventories efficiently so as to avoid the costs of
changing production rates, overtime, sub-contracting, unnecessary cost of sales and
backorder penalties during periods of peak demand.

The main objective of this study is to determine whether or not inventories in the Nigeria
Bottling Company, Ilorin Plant can be evaluated and understood using the various existing
tools of optimization in inventory management. The study methods employed include the
variance analysis, Economic Order Quantity (EOQ) Model and the Chi-square method. The
answer to the fundamental question of how best an organization which handles inventory can
be efficiently run is provided for in the analysis and findings of the study. Consequently,
recommendations on the right quantity, quality and timing of material, at the most favorable
price conclude the research study.

HRM, Marketing and Branding

In the short literature review, eight papers are going to be analysed. The main topic is the
multinational giant Cola-Cola Corporation, the world’s largest beverage company serving
more than 200 countries at a massive consumption rate of nearly two billion serving per day.
Several different aspects are going to be tackled from human resource methodologies
employed, to marketing challenges in particular countries, to branding strategies and
discussion on the strategic positioning in the global marketing world. The papers used are all
taken from journals also ranging in their interest such as ‘The Marketing Review’,
‘Thunderbird International Business Review’ and the ‘Corporate Communications: An
International Journal’. The following literature review is by no means the final one which
will be used as more papers are constantly being found, read and analyzed. The eventual
literature review will surely differ from the following one, and the papers seen here could
form part of the eventual literature review or could be moved to the bibliography section.

Coca Cola is currently the largest beverage company in the world having the widest spread of
consumers, over 200 countries with nearly two billion servings per day. This huge network

27
incorporates nearly one hundred and forty thousand company associates to distribute this
huge amount of drink. It is important to note that we are not talking about one particular
drink, for example Coca Cola or Diet Coca Cola but a whole range of beverages. In fact the
Coca Cola Company has developed bought and conglomerated more than three thousand five
hundred different drinks and has successfully or otherwise marketed and positioned these
drinks in the global market. (The Coca Cola Company, 2011a)

Having such a huge portfolio of products and ranging such a different spectrum of customers,
cultures and mind sets needs a very specific and energetic marketing approach both as a
global marketing strategy, narrowing down to a more focused cultural approach to specific
country particular marketing strategies. A strategy that works in one country could be
irrelevant to another. The first paper to be discussed is one which was published in 2005 in
the ‘Thunderbird International Business Review’ called ‘Coca Cola’s Marketing Challenges
in Brazil: The Tubainas War’. In this paper, the author discusses the marketing challenges of
the Coca Cola company as it combats its competitors, both its nemesis Pepsi but also
hundreds of local brands (called tubainas), some which are supported by the government
through specific tax incentives, thus effectively effecting the price. Brazil is clearly an
important strategic country since it corresponds to Coca Cola third largest operation while
having a significantly low consumption rate of only 144 bottles per day when compared with
the bench mark of the US with 462 bottles per year. To try and grow in the emergent market,
Coca Cola employed many different marketing strategies, from lowering the price of its
products in 1999 (from R$1.80 to R$1.25) to expand the number of brands in the market.

They also expanded on the particular type of drink that was more in line with the taste of the
Brazilian population. In fact focus was given to Kuat, a particular drink flavored with
Guarana, a Brazilian popular Amazonian fruit. In fact the Brazilian subsidiary planted 200
hectares of this fruit to try and win back the Brazilian market. Eventually the ‘winning
strategy’ was a mix of price positioning, changing the bottling technology (from plastic going
back to glass). To judge the effectiveness of the strategy that Coca Cola employed in Brazil, it
is relevant to see the current consumption of the drinks under the Coca Cola umbrella.
According to Coca Cola’s own figures, last year’s consumption for Brazil was 229 per capita,
an increase from the 144 of 2005. This amounts to nearly 60% growth in five years, a
mammoth growth in such a small time period. Clearly more work could be done to reach

28
the consumption of other high consumers that hit the 675 per capita. It is interesting to note
that in Malta, the Coca Cola consumption is the second highest in the world with a staggering
606 bottles per capita ! (The Coca Cola Company, 2011d)

Continuing on the marketing aspect but now going over to the European side of the globe,
more specifically to Spain, one can appreciate the different marketing techniques employed
to enter into the Spanish market. In the paper ‘Brand communities on the internet – A Case
Study of Coca-Cola’s Spanish virtual community’, the authors Maria Sicilia and Mariola
Palazon discussed the ‘technological’ approach the Coca Cola took to penetrate this market.
The innovative approach was the use of virtual communities as an alternative strategy. The
paper first deals with what are virtual communities and how they function. The data that the
authors collected was from the period September 2006 to July 2007. The paper is offers a
very interesting exposition of this virtual reality, social networking concept when seeing the
growth from 2000 to 2010, the Spanish consumption grow from 251 to 284, a growth of 13%
whereby the overall European market grow by 20% and the Worldwide market grow by 33%
! (The Coca Cola Company, 2011e)

The paper written in 2003 by Demetris Vrontis and Iain Sharp is titled ‘The Strategic
Positioning of Coca-Cola in their Global Marketing Operation’ and was published in
the Marketing Review journal.

The third paper discussed in this literature review deals with the strategic positioning of Coca
Cola in their Global Marketing Operation. This means that now we are going to zoom out
from the individual country and go to the less specific. The paper written in 2003 by
Demetris Vrontis and Iain Sharp is titled ‘The Strategic Positioning of Coca-Cola in their
Global Marketing Operation’ and was published in the Marketing Review journal. This paper
examines how Coca-Colas has strategically positioned itself within the world’s soft drink
marketing. The paper focusing at the models that Coca Cola has utilized for such a ‘global
take over’. This paper explains that the Coca-Cola Company has adopted both a
Differentiation and a Cost Leadership Strategy. The use of a differentiation strategy is where
the firm attempts to be diverse from its competitors by adding something to its product that
will provide a unique value to its customers. There are also various ways a firm can
differentiate depending on the industry it is in, however the costs of this differentiation policy
must be lower than the additional pricing the firm can obtain.

29
Differentiation for Coca-Cola is achieved through perceived superior quality product, which
surpasses their nearest rivals, and high brand image and recognition. The company has also
used their promotion and packaging as a means of further differentiation, for example, the
Coca-Cola bottle, which has become an internationally recognised symbol. (Vrontis and
Sharp, 2003) These are basically the two overall methods that Coca Cola employees for its
strategic management and direction. With these measures, Coca Cola managed to diverse
from its competitors and create a product which provided a unique value to its customer. The
products generated were well incorporated into a comprehensive product portfolio which
enabled world penetration and the ability to hold on to this huge market share. It is clear that
to manage a corporation this big, involves challenges in Human Resource management which
are not to be disregarded. Specifically in this line of literature, the next paper will discuss
aspects of Human Resource management specifically with respect to mentoring and
coaching. The paper is called ‘Case Study: Mentoring and Coaching as part of a human
resource development strategy: an example at Coca-Cola Foods’.

This paper, written by David J Veale and Jeffrey M Wachtel, published in the
Management
Development Review in 1996 highlights the three approaches that Coca Cola took to this
aspect of training. These three approaches include the need to strengthen the link between
their business strategy and development focus, the need to involve leadership of the
organisation in all aspects of development and to use of a variety of development tools to
match personal and organisational needs better. The three approaches were employed to reach
the first of the companies’ vision:

‘People: Be a great place to work where people are inspired to be the best they can be’.
(The Coca Cola Company, 2011f)

This paper explains that Coca Cola manages to use both coaching and mentoring methods
concurrently for the benefit of its employees. Coaching is a relationship activity designed to
increase performance of the particular company. Coaching is a more informal method and
occurs between the employee and his or her employer. Mentoring is more formal. It is based
on a one-to-one relationship with someone who normally is not in the same department or
area. A mentor can or normally uses all of the coaching types, but the purpose of mentoring is

30
much broader. Coca Cola believes that both mentoring and coaching have their own
important role in the HR development effort. Coca Cola ascertains that people (staff)
development is a main key to ensure building competitive advantage and to create as high a
performing organisation as possible. (Vaele and Wachtel, 1996)
The final paper that will be discussed in this short literature review leaves the previous
studies and focuses on the way Coca Cola ‘manages’ crisis. he Asian financial crisis was a
period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears
of a worldwide economic meltdown due to financial contagion.

In 1997, the financial outcome of the Asian Crisis began to be felt in most Asian countries,
but clearly not felt equally in all. Countries such as Indonesia, South Korea, Thailand and
Malaysia were very badly damaged in this crisis. On the other hand other countries like
Singapore, Vietnam, the Philippines, Taiwan, Burma and China were not crushed even
though they felt the financial hit of the crisis. (Pempel, 1999)

The Coca Cola factory in Indonesia saw a plunge in their sales of 30% just after this Asian
crisis but it managed to survive by employing very specific actions which might have been
seen as unrealistic or unreasonable at that point in time. In their paper ‘Strategic Lessons
from the Asian Crisis’, Singh and Yip explain the main actions taken by Coca Cola
Indonesia. The companies first response was a price increase (to increase profitability), then a
change in the mix of packaging (from high cost aluminum to a lower cost glass), to reduce
manufacturing cost and increase further more the profitability. Finally, having assured itself
of a certain amount of cash (following the above actions), Coca Cola Indonesia focused on
asset buying. In fact Coca Cola was one of the very first companies to buy assets
immediately after the Asian Crisis. Coca Cola raised its investment in its Thai bottling plant
from 5 per cent to 49 per cent, acquiring its South Korean and Philippines bottling plants and
expanded operations in India, Vietnam and other countries. (Singh and Yip, 2000)

Basically Coca Cola show its ability of turnaround from crisis to potential growth. This was
after all in line with the mission and vision of this massively huge international colossal
which again managed to find solutions in adverse situations which could easily have
damaged or even broke down the Asian side of this company. (Singh and Yip, 2000).

Soft drinks and dental health: A review of the current literature

31
In recent years there has been increased interest in the role of commercial soft drinks in
dental diseases namely as dental caries and erosion. The objective of this paper has been to
review the past and current literature to determine the present knowledge on this subject. The
literature related to dental caries, erosion, drinks, soft drinks and fruit juices was reviewed.
The literature shows efforts have been taken to modify soft drinks by either adding or
deleting certain components so as to reduce their harmful effects on teeth. A rational protocol
to encourage the sensible use of drinks and the modification of drinks to render them less
harmful would be advisable.

Gap in Study

As per various reviews of literature, firstly it was found that there is no single research
conducted on the topic related to Process costing w.r.t Coca Cola Limited. No doubt that
there are many research available on Process Costing of different companies where they
have covered almost all the aspects related to it. There are certain things like perception of
general public, their satisfaction and what are their expectations towards the different
products what are their look out, requires more attention. Very few research papers were

32
available in case of Process Costing w.r.t Coca Cola Company major focus was not on
Process Costing .
The literature review shows that most studies on process costing are focused on
manufacturing companies in general, with limited attention to the beverage industry. This gap
in the literature suggests that there is a need for more research that focuses on the application
of process costing in the beverage industry, especially for a company like Coca Cola Limited.
Furthermore, while there are some studies on process costing in the beverage industry, they
primarily focus on the production process and overlook the distribution and marketing
processes.

CHAPTER 3:- RESEARCH METHODOLOGY

This chapter includes the meaning and importance of Researched Methodology.

The objectives & Hypothesis are clearly defined and well stated in this chapter.
The Researcher has also stated his scope of study and why this research is
important. This Chapter also includes the method of data collection and also the

33
method of presentation of data including with the data interpretation and testing
of hypothesis.

3.1 Meaning & Definition

Research methodology is the specific procedures or techniques used to identify,

select, process, and analyze information about a topic. In a research paper, the
methodology section allows the reader to critically evaluate a study’s overall
validity and reliability.

Research methodology is defined as, “a highly intellectual human

activity used in the investigation of nature and matter and deals specifically
with the manner in which data is collected, analyzed and interpreted.”

A system of model, procedures and techniques used to find result of research

problem is called as ‘Research Methodology’. It is a way in which research
problems are solved systematically. It is the science of studying how research is
conducted scientifically. It involves the various techniques that can be used in
the conduct of research, selection of problem, formulation of hypothesis,
techniques used in conduct of tests, experiments, surveys, and critical studies.

3.2 Objectives of the Study

In simple terms objectives means a thing aimed at or sought. Research

objectives describe concisely what the research is trying to achieve. They
summarize the accomplishments a researcher wishes to achieve through the
project and provides direction to the study. Aims are the knowledge and

34
understanding that we need in order to answer our research question.
Well-designed aims create clear links between our research projects. Objectives
are specific research actions that we plan to carry out in our research project.
Research is incomplete without a well-defined objective and every research
needs it.

Following are the objectives of Project

● To understand the concept of Process Costing.

● To understand how process costing of coca cola accounted in the manufacturing

industry.

● To differentiate between Process Costing and Job Costing.

3.3 Scope Of The Study

While conducting research on the project of process costing and strategic analysis of coca
cola limited there are various thinks to be understand. In manufacturing of coca cola there are
various process to be undertaken like bottling making drink, packaging and how they are
accounting for each processes. While studying about the strategic analysis of coca cola
limited they used various strategies like SWOT analysis. According to their Mission ,Vision
and goals they formulated various strategies to achieved all these objectives for competing in
the market. Coca-Cola is set to capture the full potential of Trademark Coca-Cola and
accelerate growth of core brands in each market through immediate consumption
opportunities to improve margin, consumer recruitment, and revenue. Coca-Cola is
implementing a market-by-market focus on System health, including bottler revenue growth,
by balancing volume, price, mix, costs, investments and share, concentrate pricing, cost
effectiveness and route-to market efficiencies.

3.4 Limitations Of Study

35
The following are some major potential methodological issues that can impact the
conclusions can draw from the research.

Lack of previous research studies on the topic

Referencing prior research studies constitutes the basis of the literature review for thesis or
study, and these prior studies provide the theoretical foundations for the research question
you are investigating. However, depending on the scope of research topic, prior research
studies that are relevant to thesis be limited.

When there is very little or no prior research on a specific topic, may need to develop an
entirely new research typology. In this case, discovering a limitation can be considered an
important opportunity to identify literature gaps and to present the need for further
development in the area of study.

Limited access to data

Research involved surveying certain people or organizations, you might have faced the
problem of having limited access to these respondents. Due to this limited access, you might
need to redesign or restructure your research in a different way. In this case, explain the
reasons for limited access and be sure that your finding is still reliable and valid despite this
limitation.

3.5 Types of Hypothesis

Following are the six types of hypothesis:

1. Simple Hypothesis

36
It shows a relationship between one dependent variable and a single independent variable.
For example-If you eat more vegetables, you will lose weight faster. Here, eating more
vegetables is an independent variable, while losing weight is the dependent variable.

2. Complex Hypothesis

It shows the relationship between two or more dependent variables and two or more
independent variables. Eating more vegetables and fruits leads to weight loss, glowing skin,
and reduces the risk of many diseases such as heart disease.

3. Directional Hypothesis

It shows how a researcher is intellectual and committed to a particular outcome. The

relationship between the variables can also predict its nature. For example- children aged four
years eating proper food over a five-year period are having higher IQ levels than children not
having a proper meal. This shows the effect and the direction of the effect.

4. Non-directional Hypothesis

It is used when there is no theory involved. It is a statement that a relationship exists between
two variables, without predicting the exact nature (direction) of the relationship.

5. Null Hypothesis

It provides a statement which is contrary to the hypothesis. It's a negative statement, and there
is no relationship between independent and dependent variables. The symbol is denoted by
"H".

3.6 Data Collection

In Statistics, data collection is a process of gathering information from all the relevant
sources to find a solution to the research problem. It helps to evaluate the outcome of the
problem. The data collection methods allow a person to conclude an answer to the relevant
question. Most of the organizations use data collection methods to make assumptions about

37
future probabilities and trends. Once the data is collected, it is necessary to undergo the data
organization process.
The main sources of the data collections methods are “Data”. Data can be classified into two
types, namely primary data and secondary data. The primary importance of data collection in
any research or business process is that it helps to determine many important things about the
company, particularly the performance. So, the data collection process plays an important
role in all the streams. Depending on the type of data, the data collection method is divided
into two categories namely,

● Primary Data Collection methods

● Secondary Data Collection methods

3.7 Primary Data Collection Methods

Primary data collection methods are differeways in which primary data can be collected. It
explains the tools used in collecting primary data, some of which are highlighted below:

1. Interviews

An interview is a method of data collection that involves two groups of people, where the
first group is the interviewer (the researcher(s) asking questions and collecting data) and the
interviewee (the subject or respondent that is being asked questions). The questions and
responses during an interview may be oral or verbal as the case may be.

Interviews can be carried out in 2 ways, namely; in-person interviews and telephonic
interviews. An in-person interview requires an interviewer or a group of interviewers to ask
questions from the interviewee in a face-to-face fashion.
It can be direct or indirect, structured or structure, focused or unfocused, etc. Some of the
tools used in carrying out in-person interviews include a notepad or recording device to take
note of the conversation—very important due to human forgetful nature.

38
On the other hand, telephonic interviews are carried out over the phone through ordinary
voice calls or video calls. The 2 parties involved may decide to use video calls like Skype to
carry out interviews.

A mobile phone, Laptop, Tablet, or desktop computer with an internet connection is required
for this.

2. Surveys & Questionnaires

Surveys and questionnaires are 2 similar tools used in collecting primary data. They are a
group of questions typed or written down and sent to the sample of study to give responses.

After giving the required responses, the survey is given back to the researcher to record. It is
advisable to conduct a pilot study where the questionnaires are filled by experts and meant to
assess the weakness of the questions or techniques used.
There are 2 main types of surveys used for data collection, namely; online and offline
surveys. Online surveys are carried out using internet-enabled devices like mobile phones,
PCs, Tablets, etc.

They can be shared with respondents through email, websites, or social media. Offline
surveys, on the other hand, do not require an internet connection for them to be carried out.

The most common type of offline survey is a paper-based survey. However, there are also
offline surveys like Formplus that can be filled with a mobile device without access to an
internet connection.

This kind of survey is called online-offline surveys because they can be filled offline but
require an internet connection to be submitted.

3. Observation

39
The observation method is mostly used in studies related to behavioral science. The
researcher uses observation as a scientific tool and method of data collection. Observation as
a data collection tool is usually systematically planned and subjected to checks and controls.

There are different approaches to the observation method—structured or unstructured,

controlled or uncontrolled, and participant, non-participant, or disguised approach.

The structured and unstructured approach is characterized by careful definition of subjects of

observation, style of observer, conditions, and selection of data. An observation process that
satisfies this is said to be structured and vice versa.

A controlled and uncontrolled approach signifies whether the research took place in a natural
setting or according to some pre-arranged plans. If an observation is done in a natural setting,
it is uncontrolled but becomes controlled if done in a laboratory.

Before employing a new teacher, academic institutions sometimes ask for a sample teaching
class to test the teacher’s ability. The evaluator joins the class and observes the teaching,
making him or her a participant.
The evaluation may also decide to observe from outside the class, becoming a non
participant. An evaluator may also be asked to stay in class and disguise as a student, to carry
out a disguised observation.

4. Focus Groups

Focus Groups are gathering of 2 or more people with similar characteristics or who possess
common traits. They seek open-ended thoughts and contributions from participants.

A focus group is a primary source of data collection because the data is collected directly
from the participant. It is commonly used for market research, where a group of market
consumers engages in a discussion with a research moderator.

It is slightly similar to interviews, but this involves discussions and interactions rather than
questions and answers. Focus groups are less formal and the participants are the ones who do
most of the talking, with moderators there to oversee the process.

40
5. Experiments

An experiment is a structured study where the researchers attempt to understand the causes,
effects, and processes involved in a particular process. This data collection method is usually
controlled by the researcher, who determines which subject is used, how they are grouped,
and the treatment they receive.

During the first stage of the experiment, the researcher selects the subject which will be
considered. Therefore, some actions are carried out on these subjects, while the primary data
consisting of the actions and reactions are recorded by the researcher.

After which they will be analyzed and a conclusion will be drawn from the result of the
analysis. Although experiments can be used to collect different types of primary data, it is
mostly used for data collection in the laboratory.

3.8 Secondary data.

Secondary data refers to data that is collected by someone other than the primary user.
Common sources of secondary data for social science include censuses, information collected
by government departments, organizational records and data that was originally collected for
other research purposes.

Primary data, by contrast, are collected by the investigator conducting the research.

Secondary data analysis can save time that would otherwise be spent collecting data and,
particularly in the case of quantitative data, can provide larger and higher-quality databases
that would be unfeasible for any individual researcher to collect on their own. In addition,
analysts of social and economic change consider secondary data essential, since it is
impossible to conduct a new survey that can adequately capture past change and/or
developments. However, secondary data analysis can be less useful in marketing research, as
data may be outdated or inaccurate.

Secondary data collection method

41
Secondary data collection methods are different ways in which secondary data can be
collected. It explains the tools used in collecting secondary data, some of which are
highlighted below:

Collecting Information Available On The Internet

One Of The Most Popular Methods Of Collecting Secondary Data Is By Using The Internet.
Readily Available Data Can Be Accessed With The Click Of A Button, Which Makes The
Internet One Of The Best Places Where Secondary Data Can Be Collected From. It’s
Practically Free Of Cost, Although Some Websites May Charge Money—Usually Low
Prices. However, Organizations And Individuals Must Look Out For Inauthentic And
Untrustworthy Sources Of Information.

Collecting Data Available In Government And Non-Government Agencies

Government And Non-Government Agencies Such As Census Bureaus, Government Printing

Offices And Business Development Centers Store Relevant Data And Valuable Information
That Both Individuals And Organizations Can Access.

Accessing Public Libraries

Public Libraries House Copies Of Research, Public Documents And Statistical Information.
Although Services May Vary, Libraries Usually Have A Vast Collection Of Publications
Highlighting Market Statistics, Business Directories And Newsletters.

Using Data From Educational Institutions

Educational institutions Are Often Overlooked When Deciding A Method Of Collection.

Educational Institutions Conduct More Research Than Any Other Sector. Universities have
A Plethora Of primary Data That can act as vital information for secondary Research

Using Sources Of Commercial Information

42
Commercial Information Sources Like Television, Newspapers, Radio Or Magazines Are A
Great Source Of First-Hand Information On Market Research, Economic Developments,
Political Agenda And Demographic Segmentation.

Method used in collecting data for study of process costing and strategic analysis of
coca cola limited

In this research I used the secondary data collection method. Most of the data collected by
using internet. Some data collected by using articles of coca cola ltd via newspapers. Some
case study and other information through books etc.

3.9 Advantages of secondary data collection

These are the advantages of secondary data collection:

Most of the data and information is readily available and there are plenty of sources of
secondary data collection.

1. The Process Is Less Expensive Compared To The Primary Method. There’s Minimum
Expenditure Associated With Obtaining Data From Authentic Sources.

2. Data Collected For Secondary Research Can Give A Fair Idea About How Effective The
Primary Research Was. Businesses Can Hypothesize And Evaluate The Cost Of Primary
Research.

3. Re-Evaluating Data From Another Person’s Point Of View Can Uncover Things That May
Have Been Overlooked. This May Lead To Discovering New Features Or Fixing A Bug In
An App.

4. Secondary Data Collection Is Less Time-Consuming As The Data Doesn’t Need To Be

Collected From The Root. Hence, Data Collection Time Is Significantly Lower Than Primary
Methods.

5. Longitudinal And Comparative Studies Are Easier To Conduct With Secondary Data As
We Don’t Have To Wait To Draw Conclusions. For Example, To Compare The Population

43
Difference In A Country Across Five Years, We Can Simply Compare The Present Census
With That Of Five Years Back.

Researchers can look to collect data from both internal and external sources, which prevents
relying on any special or specific data collection method.

CHAPTER NO.4: DATA ANALYSIS, INTERPRETATION AND PRESENTATION

4.1 COMPANY PROFILE

Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. In

2013, Coke products were sold in over 200 countries worldwide, with consumers drinking

44
more than 1.8 billion company beverage servings each day. Coca-Cola ranked No. 87 in the
2018 Fortune 500 list of the largest United States corporations by total revenue. Based on
Interbrand's "best global brand" study of 2020, Coca-Cola was the world's sixth most
valuable brand.

Types Cola

Manufacturer The Coca-Cola Company

Country of origin United States

Region of Origin Atlanta, Georgia, US

45
 Introduced May 8, 1886; 136 years ago

Color Caramel E-150d

Variants Diet Coke

Diet Coke Caffeine-Free
Caffeine-Free Coca-Cola
Coca-Cola Zero Sugar
Coca-Cola Cherry
Coca-Cola Vanilla
Coca-Cola Citra
Coca-Cola Lime
Coca-Cola Mango

Related products Pepsi

RC Cola
Afri-Cola
Postobón
Inca Kola
Kola Real
Cavan Cola

Website coca-cola.com

Originally marketed as a temperance drink and intended as a patent medicine, it was invented
in the late 19th century by John Stith Pemberton in Atlanta, Georgia. In 1888, Pemberton sold
Coca-Cola's ownership rights to Asa Griggs Candler, a businessman, whose marketing tactics
led Coca-Cola to its dominance of the global soft-drink market throughout the 20th and 21st
century. The drink's name refers to two of its original ingredients: coca leaves and kola nuts
(a source of caffeine). The current formula of Coca-Cola remains a closely guarded trade
secret; however, a variety of reported recipes and experimental recreations have been
published. The secrecy around the formula has been used by Coca-Cola in its marketing as
only a handful of anonymous employees know the formula. The drink has inspired imitators
and created a whole classification of soft drink: colas.
The Coca-Cola Company produces concentrate, which is then sold to licensed Coca-Cola
bottlers throughout the world. The bottlers, who hold exclusive territory contracts with the
company, produce the finished product in cans and bottles from the concentrate, in
combination with filtered water and sweeteners. A typical 12-US-fluid-ounce (350 ml) can
contains 38 grams (1.3 oz) of sugar (usually in the form of high-fructose corn syrup in North
America). The bottlers then sell, distribute, and merchandise Coca-Cola to retail stores,

46
restaurants, and vending machines throughout the world. The Coca-Cola Company also sells
concentrate for soda fountains of major restaurants and foodservice distributors.

The Coca-Cola Company has on occasion introduced other cola drinks under the Coke name.
The most common of these is Diet Coke, along with others including Caffeine-Free
Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Zero Sugar, Coca-Cola Cherry, Coca-Cola
Vanilla, and special versions with lemon, lime, and coffee. Coca-Cola was called Coca-Cola
Classic from July 1985 to 2009, to distinguish it from "New Coke".

History

19th century historical origins

Confederate Colonel John Pemberton, wounded in the American Civil War and addicted to
morphine, also had a medical degree and began a quest to find a substitute for the
problematic drug.[8] In 1885 at Pemberton's Eagle Drug and Chemical House, his drugstore
in Columbus, Georgia, he registered Pemberton's French Wine Coca nerve tonic. Pemberton's
tonic may have been inspired by the formidable success of Vin Mariani, a French-Corsican
coca wine,[13] but his recipe additionally included the African kola nut, the beverage's source
of caffeine.[14] A Spanish drink called "Kola Coca" was presented at a contest in
Philadelphia in 1885, a year before the official birth of Coca-Cola. The rights for this Spanish
drink were bought by Coca-Cola in 1953.[15]

In 1886, when Atlanta and Fulton County passed prohibition legislation, Pemberton
responded by developing Coca-Cola, a nonalcoholic version of Pemberton's French Wine
Coca.[16] It was marketed as "Coca-Cola: The temperance drink", which appealed to many
people as the temperance movement enjoyed wide support during this time.[4] The first sales
were at Jacob's Pharmacy in Atlanta, Georgia, on May 8, 1886, where it initially sold for five
cents a glass. Drugstore soda fountains were popular in the United States at the time due to
the belief that carbonated water was good for the health, and Pemberton's new drink was
marketed and sold as a patent medicine, Pemberton claiming it a cure for many diseases,
including morphine addiction, indigestion, nerve disorders, headaches, and impotence.

47
Pemberton ran the first advertisement for the beverage on May 29 of the same year in the
Atlanta Journal.

By 1888, three versions of Coca-Cola – sold by three separate businesses – were on the
market. A co-partnership had been formed on January 14, 1888, between Pemberton and four
Atlanta businessmen: J.C. Mayfield, A.O. Murphey, C.O. Mullahy, and E.H. Bloodworth.
Not codified by any signed document, a verbal statement given by Asa Candler years later
asserted under testimony that he had acquired a stake in Pemberton's company as early as
1887. John Pemberton declared that the name "Coca-Cola" belonged to his son, Charley, but
the other two manufacturers could continue to use the formula.

Charley Pemberton's record of control over the "Coca-Cola" name was the underlying factor
that allowed for him to participate as a major shareholder in the March 1888 Coca-Cola
Company incorporation filing made in his father's place. Charley's exclusive control over the
"Coca-Cola" name became a continual thorn in Asa Candler's side. Candler's oldest son,
Charles Howard Candler, authored a book in 1950 published by Emory University. In this
definitive biography about his father, Candler specifically states: "on April 14, 1888, the
young druggist Asa Griggs Candler purchased a one-third interest in the formula of an almost
completely unknown proprietary elixir known as Coca-Cola."[24] The deal was actually
between John Pemberton's son Charley and Walker, Candler & Co. – with John Pemberton
acting as cosigner for his son. For $50 down and $500 in 30 days, Walker, Candler & Co.
obtained all of the one-third interest in the Coca-Cola Company that Charley held, all while
Charley still held on to the name. After the April 14 deal, on April 17, 1888, one-half of the
Walker/Dozier interest shares were acquired by Candler for an additional $750.

Company

In 1892, Candler set out to incorporate a second company, the Coca-Cola Company (the
current corporation). When Candler had the earliest records of the "Coca-Cola Company"

48
destroyed in 1910, the action was claimed to have been made during a move to new
corporation offices around this time.

After Candler had gained a better foothold on Coca-Cola in April 1888, he nevertheless was
forced to sell the beverage he produced with the recipe he had under the names "Yum Yum"
and "Koke". This was while Charley Pemberton was selling the elixir, although a cruder
mixture, under the name "Coca-Cola", all with his father's blessing. After both names failed
to catch on for Candler, by the middle of 1888, the Atlanta pharmacist was quite anxious to
establish a firmer legal claim to Coca-Cola, and hoped he could force his two competitors,
Walker and Dozier, completely out of the business, as well.

John Pemberton died suddenly on August 16, 1888. Asa Candler then decided to move
swiftly forward to attain full control of the entire Coca-Cola operation.

Charley Pemberton, an alcoholic and opium addict, unnerved Asa Candler more than anyone
else. Candler is said to have quickly maneuvered to purchase the exclusive rights to the name
"Coca-Cola" from Pemberton's son Charley immediately after he learned of Dr. Pemberton's
death. One of several stories states that Candler approached Charley's mother at John
Pemberton's funeral and offered her $300 in cash for the title to the name. Charley Pemberton
was found on June 23, 1894, unconscious, with a stick of opium by his side. Ten days later,
Charley died at Atlanta's Grady Hospital at the age of 40.

In Charles Howard Candler's 1950 book about his father, he stated: "On August 30 [1888], he
[Asa Candler] became the sole proprietor of Coca-Cola, a fact which was stated on
letterheads, invoice blanks and advertising copy."

With this action on August 30, 1888, Candler's sole control became technically all true.
Candler had negotiated with Margaret Dozier and her brother Woolfolk Walker a full
payment amounting to $1,000, which all agreed Candler could pay off with a series of notes
over a specified time span. By May 1, 1889, Candler was now claiming full ownership of the
Coca-Cola beverage, with a total investment outlay by Candler for the drink enterprise over
the years amounting to $2,300.

49
In 1914, Margaret Dozier, as co-owner of the original Coca-Cola Company in 1888, came
forward to claim that her signature on the 1888 Coca-Cola Company bill of sale had been
forged. Subsequent analysis of other similar transfer documents had also indicated John
Pemberton's signature had most likely been forged as well, which some accounts claim was
precipitated by his son Charley.

On September 12, 1919, Coca-Cola Co. was purchased by a group of investors led by Ernest
Woodruff's Trust Company for $25 million and reincorporated under Delaware General
Corporation Law. The company publicly offered 500,000 shares of the company for $40 a
share.

In 1986, the Coca-Cola Company merged with two of their bottling operators (owned by JTL
Corporation and BCI Holding Corporation) to form Coca-Cola Enterprises Inc. (CCE).

In December 1991, Coca-Cola Enterprises merged with the Johnston Coca-Cola Bottling
Group, Inc.

Production

Listed ingredients
Carbonated water
Sugar (sucrose or high-fructose corn syrup (HFCS) depending on country of origin)
Caffeine
Phosphoric acid
Caramel color (E150d)
Natural flavorings
A typical can of Coca-Cola (12 fl ounces/355 ml) contains 39 grams of sugar, 50 mg of
sodium, 0 grams fat, 0 grams potassium, and 140 calories. On May 5, 2014, Coca-Cola said it
was working to remove a controversial ingredient, brominated vegetable oil, from its drinks.
A UK 330 ml can contains 35 grammes of sugar and 139 calories.
Formula of natural flavorings

50
The exact formula of Coca-Cola's natural flavorings (but not its other ingredients, which are
listed on the side of the bottle or can) is a trade secret. The original copy of the formula was
held in Truist Financial's main vault in Atlanta for 86 years. Its predecessor, the Trust
Company, was the underwriter for the Coca-Cola Company's initial public offering in 1919.
On December 8, 2011, the original secret formula was moved from the vault at SunTrust
Banks to a new vault containing the formula which will be on display for visitors to its World
of Coca-Cola museum in downtown Atlanta.

According to Snopes, a popular myth states that only two executives have access to the
formula, with each executive having only half the formula. However, several sources state
that while Coca-Cola does have a rule restricting access to only two executives, each knows
the entire formula and others, in addition to the prescribed duo, have known the formulation
process.

On February 11, 2011, Ira Glass said on his PRI radio show, This American Life, that TAL
staffers had found a recipe in "Everett Beal's Recipe Book", reproduced in the February 28,
1979, issue of The Atlanta Journal-Constitution, that they believed was either Pemberton's
original formula for Coca-Cola, or a version that he made either before or after the product
hit the market in 1886. The formula basically matched the one found in Pemberton's diary.
Coca-Cola archivist Phil Mooney acknowledged that the recipe "could be a precursor" to the

51
formula used in the original 1886 product, but emphasized that Pemberton's original formula
is not the same as the one used in the current product.

Use of stimulants in formula

When launched, Coca-Cola's two key ingredients were cocaine and caffeine. The cocaine was
derived from the coca leaf and the caffeine from kola nut (also spelled "cola nut" at the time),
leading to the name Coca-Cola.

Coca leaf

Pemberton called for five ounces of coca leaf per gallon of syrup (approximately 37 g/L), a
significant dose; in 1891, Candler claimed his formula (altered extensively from Pemberton's
original) contained only a tenth of this amount. Coca-Cola once contained an estimated nine
milligrams of cocaine per glass. (For comparison, a typical dose or "line" of cocaine is 50–75
mg.) In 1903, it was removed.

Kola nuts for caffeine

The kola nut acts as a flavoring and the original source of caffeine in Coca-Cola. It contains
about 2.0 to 3.5% caffeine, and has a bitter flavor.

Franchised production model

The actual production and distribution of Coca-Cola follows a franchising model. The
Coca-Cola Company only produces a syrup concentrate, which it sells to bottlers throughout
the world, who hold Coca-Cola franchises for one or more geographical areas. The bottlers
produce the final drink by mixing the syrup with filtered water and sweeteners, putting the
mixture into cans and bottles, and carbonating it, which the bottlers then sell and distribute to
retail stores, vending machines, restaurants, and foodservice distributors.

Competitors

52
Pepsi, the flagship product of PepsiCo, the Coca-Cola Company's main rival in the soft drink
industry, is usually second to Coke in sales, and outsells Coca-Cola in some markets. RC
Cola, now owned by the Dr Pepper Snapple Group, the third-largest soft drink manufacturer,
is also widely available.

Around the world, many local brands compete with Coke. In South and Central America
Kola Real, also known as Big Cola, is a growing competitor to Coca-Cola. On the French
island of Corsica, Corsica Cola, made by brewers of the local Pietra beer, is a growing
competitor to Coca-Cola. In the French region of Brittany, Breizh Cola is available. In Peru,
Inca Kola outsells Coca-Cola, which led the Coca-Cola Company to purchase the brand in
1999. In Sweden, Julmust outsells Coca-Cola during the Christmas season. In Scotland, the
locally produced Irn-Bru was more popular than Coca-Cola until 2005, when Coca-Cola and
Diet Coke began to outpace its sales. In the former East Germany, Vita Cola, invented during
communist rule, is gaining popularity.

In India, Coca-Cola ranked third behind the leader, Pepsi, and local drink Thums Up. The
Coca-Cola Company purchased Thums Up in 1993. As of 2004, Coca-Cola held a 60.9%
market-share in India. Tropicola, a domestic drink, is served in Cuba instead of Coca-Cola,
due to a United States embargo. French brand Mecca-Cola and British brand Qibla Cola are
competitors to Coca-Cola in the Middle East.

In Turkey, Cola Turka, in Iran and the Middle East, Zamzam and Parsi Cola, in some parts of
China, Future Cola, in the Czech Republic and Slovakia, Kofola, in Slovenia, Cockta, and the
inexpensive Mercator Cola, sold only in the country's biggest supermarket chain, Mercator,
are some of the brand's competitors. Classiko Cola, made by Tiko Group, the largest
manufacturing company in Madagascar, is a competitor to Coca-Cola in many regions.

In 2021, Coca-Cola petitioned to cancel registrations for the marks Thums Up and Limca
issued to Meenaxi Enterprise, Inc. based on misrepresentation of source. The Trademark Trial
and Appeal Board concluded that "Meenaxi engaged in blatant misuse in a manner calculated
to trade on the goodwill and reputation of Coca-Cola in an attempt to confuse consumers in
the United States that its Thums Up and Limca marks were licensed or produced by the
source of the same types of cola and lemon-lime soda sold under these marks for decades in
India."

53
Cost accounting is an approach to evaluating the overall costs that are associated with
conducting business. Generally based on standard accounting practices, cost accounting is
one of the tools that managers utilize to determine what type and how much expenses is
involved with maintaining the current business model. At the same time, the principles of
cost accounting can also be utilized to project changes to these costs in the event that specific
changes are implemented. When it comes to measuring how wisely company resources are
being utilized, cost accounting helps to provide the data relevant to the current situation. By
identifying production costs and further defining the cost of production by three or more
successive business cycles, it is possible to note any trends that indicate a rise in production
costs without any appreciable changes or increase in production of goods and services. By
using this approach, it is possible to identify the reason for the change, and take steps to
contain the situation before bottom line profits are impacted to a greater degree.
Product development and marketing strategies are also informed by the utilization of cost
accounting. In terms of product development, it is possible to determine if a new product can
be produced at a reasonable price, considering the cost of raw materials and the labour and
equipment necessary to product a finished product. At the same time, marketing protocols
can make use of cost accounting to project if the product will sell enough units to make
production a viable option. Cost accounting is helpful in making a number of business
decisions. By weighing the actual costs versus the anticipated benefit, cost accounting can
help a company to avoid launching a product with no real market, prevent the purchase of
unnecessary goods and services, or alter the current operational model in a manner that will
decrease efficiency. Whether utilized to evaluate the status of a department within the
company or as a tool to project the feasibility of opening new locations or closing older ones,
cost accounting can provide important data that may impact the final decision. Accounting
shapes our lives. It changes organizations and alters our social, economic and physical
environment. Whether or not we engage in producing and/or reading accounting information,
it influences what we can and cannot do. Corporate decisions regarding new product
developments, pricing strategy, staff recruitment and salary levels are generally influenced by
accounting information. The way in which a manager acts is often associated with how he or
she reacts to accounting data. At times, accounting motivates certain types of behavior and
discourages others. In most organizations, decisions, actions and human.
Process Costing of Coca Cola Limited

54
The Coca-cola company is today the world’s largest beverage company. it makes, distributes
and markets its beverages which are widely used in the whole world because of their non
alcoholi nature. The company started business operations in the year 1886 and from that time
up to today, the number of products that are being produced have reached about four hundred.
The coca cola company has spread its business operations all over the world and currently, it
is operational in more than three hundred countries.

Batch Costing

Batch costing is nothing but a modified form of job costing in which the cost of each batch of
production is calculated. This method of costing is suitable for manufacturing units in which
items are manufactured in definite batches.

The batch costing method is also known as lot costing because products are produced in lots
of, for example, 500, 1,000, or any other number.

Batch costing is commonly used in the pharmaceutical industry. It is also applied in

ready-made garment factories, watch factories, and production facilities for radios,
televisions, and other items.

Batch costing is a varied form of job costing. While job costing is concerned with
ascertaining the cost of executing jobs, according to customer specifications, batch costing
focuses on a group of identical products manufactured for the firm’s own stock.

55
Batch costing is generally applied to manufacture medicines, component parts of complex
products (e.g., cars, scooters, computers, watches, and televisions), biscuits, food products,
and ready-made garments.

The products manufactured in a batch are used for a particular purpose (e.g., spare parts for
composite products are to be used in a specific model only) or they are consumed within a
specified period (e.g., medicines and food products).

Methods of Costing at Coca-Cola Company:

56
These costing methodologies establish how inventory is costed (valued) each time new
inventory is added to an inventory pool. As inventory items are sold and/or used in the
production process the cost of the sale/WIP (Work In Progress) assigned to the transaction is
derived from the number of items from an inventory layer multiplied by the unit price of the
inventory layer needed to satisfy the sale/manufacturing requirement. Each method above
determines the cost of the inventory that is assigned to Cost of Goods Sold (CGS)/Work In
Progress (WIP).FIFO (First-in, first-out) method is based on the perception that the first
inventories purchase dare the first ones to be sold. It is a cost flow assumption for most
companies. Since the theory perfectly matches to the actual flow of goods, therefore it is
considered as the right way to value inventory. Also, it is more logical approach, as oldest
goods get sold first, thereby reducing the risk of getting obsolete.

In the FIFO process, goods which are purchased earlier are the first one get removed from the
inventory account and the remaining goods are accounted for the recently incurred costs. As a
result, the inventory asset recorded in the balance sheet has cost figures close to the most
recent obtainable market values. By this method, older inventory costs are matched against
current earnings and are recorded in cost of goods sold. This gives an idea that gross margin
doesn’t essentially reflect on matching the cost and revenue numbers. During inflation,
current-cost revenue is matched against older and low-cost inventory goods, which results in
maximum gross margin. FIFO way of valuing inventory is accepted in international
standards. It yields same results for both periodic and perpetual inventory system.

57
Steps for Process Costing

Follow the 5 steps for process costing.

1. Analyze inventory flow
2. Convert in-process inventory to equivalent units
3. Compute all applicable costs
4. Calculate the cost per unit of finished and in-process inventory
5. Allocate costs to units of finished and in-process inventory

Analyse inventory flow

In the process planning we will cost by process. Process 1 involved preparing the raw
materials for printing, process 2 is the actual printing, and process 3 is packaging the planners
to be moved to finished goods inventory. Costing is simpler in this system because rather than
having to prepare a costing sheet for many products, we only need to do costing for three
departments or processes.

We start with the basic inputs:

1. Raw materials
2. Wages
3. Manufacturing overhead

Manufacturing overhead will be estimated, just as in the job costing method, but will need to
be recorded as incurred. The clearing account will be used to accumulate the actual costs, and
a reconciliation will be done at the end of each period.

A processing department is a unit where work is performed on a product and where materials,
labor or overhead are added to the product. In the case of our planner, we first add the raw
materials, then we add labor to process the raw materials, next conclude with additional labor
to package the finished product to prepare it for shipment. These will be the three processes
used for costing. Each business will have different processing departments, depending on the
product they are making.

58
Each of these processing departments will be a work-in-process center. So a job costing
system may have only one work-in-process, while a process costing system will have several.
In the Ultimate Planner example, there will be three WIP accounts.

Raw materials, labor and overhead can be added during any process. So the costs in Process 2
will include everything happening in that process, plus the costs that are attached to the
partially completed product transferred in from Process 1. These are called transferred-in
costs.

Convert in-process inventory to equivalent units

Equivalent units of production are a concept used to understand how much money partially
completed products are worth to a company. They are useful for process costing, which is the
analysis of money flow within the manufacturing process.

Equivalent units describe how much work has been done on a certain number of physical
items. To simply calculate equivalent units, you can multiply the number of physical items by
the percentage of the work done on them. For two items that are 50% done, you would have
one equivalent unit (2 x 50% = 1). When the items are completely finished, the number of
equivalent units is equal to the physical items.

This simple equation, however, doesn't take into effect that the needs of the manufacturing
process vary over time. For instance, most of the materials may be added to an item at the
beginning of the manufacturing process, while more labor is needed later in th e process to
assemble and refine. To account for this variation, accountants usually calculate equivalent
units of production for three kinds of costs: materials, overhead costs and labor costs. The
equivalent units of production may be different for the three kinds of costs.

59
How to use the weighted average method

Here is the weighted average method formula:

(Number of units completed) + (units in progress x percentage of completion for this

cost
component) = equivalent units of production for cost component

To calculate equivalent units of production with the weighted average method, an accountant
would
follow these steps:

1. Find number of units completed within the time period

The accountant first finds out how many units have been finished and sent out. Since these
items are 100% complete, each unit sent out is one equivalent unit of production.

Example: Small Item Production Company is calculating their process costs for the month of
January. They have completed and sent out 3,000 miniature mice in January.

2. Find number of units in progress at the end of the time period

Next, the accountant finds out how many units are partially finished at the end of the time
period. This number is sometimes called the ending work-in-progress inventory.

Example: Small Item Production Company started 4,000 more mini mice.

3. Find what percentage of materials, labor and overhead costs are complete for those
items

The accountant finds out how much work is complete on the units in progress and converts it
into a percentage if necessary.

60
Example: The incomplete mice have 80% of the materials added to them, but they have had
only 35% of the labor and the overhead costs applied.

4. Apply formula to calculate equivalent units of production for materials, labor and
overhead
costs or conversion costs

The accountant can apply the formula to get the equivalent units of production for each
aspect of the item's costs. Sometimes accountants combine labor and overhead costs and refer
to it as the conversion cost.

Example: Small Item Production Company accountants calculate the equivalent units of
production for materials like this:

3,000 mini mice completed + (4,000 mini mice in progress x 80% of materials added) = total
equivalent units of production for materials

3,000 + 3,200 = 6,200 equivalent units of production for mice materials

The accountants calculate the equivalent units of production for conversion costs like this:

3,000 mini mice completed + (4,000 mini mice in progress x 35% of conversion costs
complete) = total equivalent units of production for conversion costs

3,000 + 1,400 = 4,400 equivalent units of production for mice conversion costs

So the Small Item Production Company accountants report that they completed 6,200
equivalent units of production for mice materials and 4,400 equivalent units of production for
conversion costs during the month of January.

How to use the first-in first-out (FIFO) method

This method is called first-in first-out because it includes information about the partially
finished items at the beginning of the time period, the items first in the manufacturing process

61
for that period, and the costs to get them finished and shipped out, so they are the first items
sent out during that time period.

Here is the formula for the FIFO method:

Equivalent units of production to complete beginning inventory + units started and completed
during the period + equivalent units of production for items partly completed during the
period = total equivalent units of production for the period

And here is the formula to calculate how many equivalent units it takes to complete the
beginning inventory:
Units in beginning inventory x (100% - percentage completion of beginning inventory) =
equivalent units of production to complete beginning inventory

Here are the steps to calculate equivalent units of production with the FIFO method:

1. Calculate equivalent units of production needed to complete items in beginning

inventory

To calculate the equivalent units of production still required to finish the beginning inventory,
the accountant figures out how many items were partially completed at the beginning of the
month and how much work was done at that time. They can then calculate the equivalent
units of production that were needed to finish these items.

Example: Small Item Production Company is calculating material costs for its miniature cats
in January. They had 5,000 partially completed miniature cats at the beginning of January.
These cats had 70% of the materials added. Small Item accountants calculate the remaining
equivalent units of production like this:
5,000 cats in progress x (100% - 70% materials added) = 5,000 cats x 30% materials left to
be added = 1,500 remaining material equivalent units of production

2. Find number of units completed during the time period

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Next, the accountant adds the number of units completed during the time period. Each of
these units is equal to one equivalent unit of production since they are done.
Example: Small Item Production Company manufactured 6,000 miniature cats from start to
finish during January.

3. Find number of units started during the time period that are incomplete

This is the number of units that are partially completed at the end of the time period, or
ending work-in-progress inventory.
Example: Small Item Production Company started an additional 3,000 miniature cats during
January.

4. Find what percentage of work is done on units started during the time period

This may vary depending on whether you are calculating material cost, labor cost, overhead
cost or conversion cost (labor and overhead cost combined).
Example: The additional 3,000 mini cats have had 40% of materials added so far.

5. Calculate equivalent units of production for ending work-in-progress inventory

To calculate this, the accountant would multiply the number of items in progress by the
percentage of work done on them so far.

Example: The Small Item accountants calculate the material equivalent units of production
for the 3,000 mini cats that are the ending work-in-progress inventory:

3,000 items in progress x 40% of materials added = 1,200 material equivalent units of
production for the ending work-in-progress cat inventory.

6. Calculate total equivalent units of production for the time period

The accountant then uses the FIFO formula to calculate the equivalent units of production for
the time period by entering the values from earlier steps.

63
Example: The Small Item accountants calculate the cat material equivalent units of
production for January like this:

1,500 equivalent units of production to finish previous cats + 6,000 cats completed in January
+ 1,200 equivalent units of production done on cats not yet completed = 8,700 equivalent
units of production With this calculation, the Small Item accountants see that the total cost of
materials used to complete cats in January was the cost of materials for 8,700 cats.

Once an accountant knows the equivalent units of production, they can also calculate how
much it costs to finish manufacturing the inventory. They calculate these costs using the total
number of items, equivalent units of production and the costs to make each item. Here is the
formula to calculate the remaining costs to finish inventory:

(Total items finished and in progress x cost per item to complete) - (equivalent units of
production x cost per item to complete) = remaining cost to finish inventory

Example: Small Item Production Company knows it costs $2 in materials to finish each mini
mouse.

They want to know how much money they will need to finish all 7,000 mini mice they started
in January. They calculate the remaining cost by applying the formula:

(7,000 total mice x $2) - (6,200 equivalent units of mice production x $2) = remaining cost
for materials $14,000 - $12,400 = $1,600

Small Item Production Company has to spend $1,600 more on materials for January mice.

Product Cost Flows in a Process Costing System

As products physically move through the production process, the product costs associated
with these products move through several important accounts as shown back in Figure 4.1 "A
Comparison of Cost Flows for Job Costing and Process Costing". In this section, we present a
detailed look at how product costs flow through accounts using a process costing system.

64
Later in the chapter, we explain how dollar amounts are established for product costs that
flow through the accounts. As you review each of the following cost flows for a process
costing system, remember that product costs are now tracked by department rather than by
job.

Direct Materials

When direct materials are requisitioned from the raw materials storeroom, a journal entry is
made to reduce the raw materials inventory account and increase the appropriate
work-in-process inventory account. For example, assume the Assembly department of Desk
Products, Inc., requisitions direct materials to be used in production. The journal entry to
reflect this is as follows:

WIP inventory - assembly XXX

Raw materials inventory XXX

The use of direct materials is not limited to one production department. Suppose the
Finishing department requisitions direct materials for production. The journal entry to reflect
this is as follows:

Direct Labor
Direct labor costs are recorded directly in the production department’s work-in-process
inventory account. Assume direct labor costs are incurred by the Assembly department. The
journal entry to reflect this is as follows:

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As with direct materials, the use of direct labor is not limited to one production department.
Suppose direct labor costs are incurred by the Finishing department. The journal entry to
reflect this is as follows:

Manufacturing Overhead

Assume manufacturing overhead costs (often simply called overhead costs) are being applied
to products going through the Assembly department. The journal entry to reflect this is as
follows:

Transferred-In Costs

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Assume the Assembly department at Desk Products, Inc., completes a batch of desks and
moves the desks to the Finishing department. The costs associated with these desks must be
transferred from the work-in-process inventory account for the Assembly department to the
work-in-process inventory account for the Finishing department. Thus these costs are being
transferred in to the Finishing department. The journal entry to reflect this is as follows:

Finished Goods

When goods go through the final production department and are completed, the related costs
are moved to the finished goods inventory account. The journal entry to reflect this is as
follows:

Cost of Goods Sold

Once the completed goods are sold, the related costs are moved out of the finished goods
inventory account and into the cost of goods sold account. The journal entry to reflect this is
as follows:

summarizes the flow of product costs through T-accounts for each of the journal entries
presented in this section. Note that when goods are sold and production costs are moved from
finished goods inventory to cost of goods sold, an additional entry is made to record the
revenue associated with this transaction. We do not show this entry because the focus of this
section is on the flow of production costs rather than revenues.

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Compute all applicable costs

1. Fixed costs

Fixed costs are expenses that do not change with the amount of output produced. This means
that the costs remain unchanged even when there is zero production or when the business has
reached its maximum production capacity. For example, a restaurant business must pay its
monthly, quarterly, or yearly rent regardless of the number of customers it serves. Other
examples of fixed costs include salaries and equipment leases.

2. Variable costs

Variable costs are costs that change with the changes in the level of production. That is, they
rise as the production volume increases and decrease as the production volume decreases. If
the production volume is zero, then no variable costs are incurred. Examples of variable costs
include sales commissions, utility costs, raw materials, and direct labor costs.

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For example, in a clothing manufacturing facility, the variable costs may include raw
materials used in the production process and direct labor costs. If the raw materials and direct
labor costs incurred in the production of shirts are $9 per unit and the company produces
1000 units, then the total variable costs are $9,000.

3. Total cost

Total cost encompasses both variable and fixed costs. It takes into account all the costs
incurred in the production process or when offering a service. For example, assume that a
textile company incurs a production cost of $9 per shirt, and it produced 1,000 units during
the last month. The company also pays a rent of $1,500 per month. The total cost includes the
variable cost of $9,000 ($9 x 1,000) and a fixed cost of $1,500 per month, bringing the total
cost to $10,500.

Calculate the cost per unit of finished and in-process inventory

The first step when calculating the cost involved in making a product is to determine the
fixed costs. The next step is to determine the variable costs incurred in the production
process. Then, add the fixed costs and variable costs, and divide the total cost by the number
of items produced to get the average cost per unit.

For the company to make a profit, the selling price must be higher than the cost per unit.
Setting a price that is below the cost per unit will result in losses. It is, therefore, critically
important that the company be able to accurately assess all of its costs.

Management Accounting Techniques

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Coca-Cola applies process costing alongside Activity-Based costing system. Both techniques
are significantly associated with product profitability but are however applicable to dynamic
competitive environmental relationships. Coca-Cola uses process costing to track product and
customer costs. It can work out direct materials costs, direct labor, and factory overhead costs
to products as well as customers in three major processes:

(1) Concentrate and syrup manufacturing,

(2) Blending, and

(3) Packaging, Blocher, et al., (2008).

Normal losses are charged to the production processes as product cost while abnormal losses
are related to the period in which they occurred. Activity-Based Costing ABC process is
governing Coca-Cola's daily business process. The company determines the cost of each
product based on the activities involved in the three major production processes. ABC is very
useful because it determines the price of its products based on the number of activities
undertaken in the manufacturing process. Thus, company budgets its costs of operations
depending on the number of activities involved. Thus the higher the activities involved in a
production, the higher Coca-Cola will plan for such production and vice versa, Chiemelie,
(2014).

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Analysis of 5 Years Cost of Goods Sold With Sales And Income

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Financial Statement and Performance Analysis

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Coca Cola Net operating Revenue

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CHAPTER NO.5: 5.1 FINDINGS

Findings are the principal outcomes of a research project; what the project
suggested, revealed or indicated. This usually refers to the totality of outcomes,
rather than the conclusions or recommendations drawn from them. The findings
section presents the important data that was collected during the research
process. It should be presented concisely and clearly to the reader. There should
be no interpretation, speculation, and analysis of the data. After careful
consideration and study of literature reviews, the methodology of the present
study was designed, prepared and administered. This particular research also
has certain findings, and they are as follows:

1. Coca Cola Limited incurs significant production costs, including direct

materials (such as sugar, flavorings, and packaging), direct labor (such as
machine operators and maintenance personnel), and manufacturing
overhead (such as equipment depreciation, utilities, and maintenance).

2. Coca Cola Limited uses batch production, which means that the
production process is divided into batches or lots. Each batch follows the
same process, and costs are accumulated for each batch separately.

3. Coca Cola Limited uses a standard cost system to track production costs.
Standard costs are predetermined costs for each unit of output, based on
estimates of the costs of direct materials, direct labor, and manufacturing
overhead.

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 4. Coca Cola Limited tracks variances between actual and standard costs. If
actual costs are higher than standard costs, it is an unfavorable variance,
while if actual costs are lower than standard costs, it is a favorable
variance.

5. Coca Cola Limited continuously looks for ways to improve its production
processes to reduce costs and increase efficiency. One example is the
implementation of automated production lines that use robotics and
advanced sensors to increase production speed and reduce labor costs.

6. Coca Cola Limited differentiates its products based on flavors, packaging,

and marketing. The company incurs additional costs to produce different
flavors and packaging options, which are reflected in the cost per unit of
production.

7. Coca Cola Limited allocates manufacturing overhead costs to production

batches based on a predetermined overhead rate, which is calculated by
dividing the estimated total manufacturing overhead costs by the
estimated total production volume.

Overall, the process costing analysis of Coca Cola Limited indicates that the
company incurs significant production costs, uses batch production, tracks cost
variances, and continuously looks for ways to improve its production processes
to reduce costs and increase efficiency.

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5.2 CONCLUSIONS

Coca-Cola Limited uses a process cost system to determine the cost of its
products. This system is appropriate for a company that produces large volumes
of homogeneous products.

The production process of Coca-Cola Limited involves several stages, including

blending, carbonation, filling, and packaging. Each stage incurs a cost, which is
added to the product cost.

The cost of direct materials is the largest cost component in the production
process of Coca-Cola Limited. The company sources high-quality raw materials
to maintain the consistency and quality of its products.

The cost of direct labor is relatively low, as the production process is highly
automated. This reduces the risk of human error and ensures consistency in
product quality.

The overhead costs of Coca-Cola Limited are mainly related to the maintenance
and repair of machinery and equipment used in the production process. These
costs are allocated to the products using an overhead allocation rate.

The cost per unit of Coca-Cola Limited's products varies depending on the
production volume. The company can reduce the cost per unit by increasing
production volume and improving production efficiency.

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Overall, the process costing analysis of Coca-Cola Limited shows that the
company has an efficient production process that allows it to produce
high-quality products at a reasonable cost.
5.3 SUGGESTIONS

1. Identify the production process that you want to analyze in detail. Coca
Cola Limited produces a variety of beverages, each with its own
production process. Focus on one process to analyze the costs associated
with that process.

2. Determine the cost categories that you want to track for the process.
Some examples of cost categories for Coca Cola Limited could be direct
materials, direct labor, manufacturing overhead, and packaging costs.

3. Collect data on the costs associated with each cost category. For direct
materials, this could include data on sugar, flavorings, and packaging
materials. For direct labor, this could include data on machine operators
and maintenance personnel. Manufacturing overhead costs could include
equipment depreciation, utilities, and maintenance costs.

4. Allocate the costs to the different stages of the production process. This
helps determine the cost per unit of production. The allocation method
used will depend on the type of cost and the process being analyzed.

5. Using the total cost allocated to the process and the total units produced,
calculate the cost per unit of production. This helps identify the cost
drivers and areas where costs can be reduced.

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6. Analyze the cost per unit of production to identify inefficiencies and
areas where costs can be reduced. This could include identifying process
bottlenecks, waste, or areas where quality could be improved.

7. The packaging for Coca-Cola does not affect significantly from PET and
Cans, so that if the company tend to transform the packaging material in
order to lower the cost, then there is no need to worry about. Just keep in
mind that whatever the packaging material it is, as long as the design and
shape is attractive.

8. The price offered for Coca-Cola is need to be monitored due to the

challengers arise and several consumers tend to find any soda that has
best price for value for them. So it is needed to do benchmarking on
challengers’ pricing strategy.

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CHAPTER NO.6: BIBLIOGRAPHY

1. Internet

https://www.annualreports.com/HostedData/AnnualReportArchive/c/NYS
E_KO_2006.pdf

https://www.economicsdiscussion.net/cost-accounting/process-costing/32720

https://www.google.com/search

https://www.businessinsider.in/strategy/7-brilliant-strategies-coca-cola-used
-to-become-one-of-the-worlds-most-recognizable-brands/articleshow/47649
874.

https://investors.coca-colacompany.com

https://www.studocu.com/row/document/eslsca-business-school-paris-egypt
/project-management/production-process-of-coca-cola/24036950

https://www.netsuite.com/portal/resource/articles/accounting/process-costin
g.shtml

https://core.ac.uk/download/pdf/56372402.pdf

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https://saylordotorg.github.io/text_managerial-accounting/s08-how-is-proc
ess-costing-used-to.html

2. Books

Institute of Chartered Accountants of India Cost Accounting Book

Institute of Chartered Accountants of India Strategic Management Book

Master Of Commerce Advanced Cost Accounting Manan Prakashan Book

Institute of Cost Management Accountant Of India Cost Accounting

Intermediate Book

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