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Coca Cola Target Treatment of Target Costs Essay Sample

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Coca Cola Target Treatment of Target Costs Essay Sample

Coca Cola Company

I have taken  Coca Cola but the figures in consideration are imaginary and the year in assumption is year 2007. Coca Cola is an excellent company from Atlanta USA,  operating in the BEVERAGE industry. The company main competitor is Pepsi. They produce and market the freshening product in over 200 countries.

Coca-Cola Corporation is the world’s leading soft drink Company that produces billions of fizzy drinks to the world population. Based in Atlanta Georgia, Coca-Cola is the most recognized brand in the world. By creating innovative and unforgettable advertisements and making sure that every shop or food stand in the world has a Coca-Cola product from china to Europe to India and Africa.

Coca-Cola’s mission is to provide products that are easily recognized by everyone. Products that are produced close to the consumer. A product that is transported and well packed and a product that is refreshing to drink and is easily purchased by everyone. As a leader in the soft drinks market Coca-Cola’s market environment that consists of the company’s suppliers, distributors, dealers and customers as well as the broad environment that consists of demographic environment related to the population, economic environment, natural environment, technological environment and social cultural environment.

I have identified Coke brand, which is a freshening beverage,  because the company independent branches bottling branches  and the activities involved  in bottling branches are bottling , mixing and production control. The inputs identified are costs of materials, labor costs and managers salary. The assumed costs are  60000, 24000 and 12000 for the mentioned above respectively. The basis will be on actual, total number of employees and direct employees. Direct employees are as 120,  25 for mixing and production control  5 while total number of employees 200 in bottling 35 in mixing and 5 production costs. The  actual costs for materials were 45,000,  10000 and 5000 for bottling , mixing and production control consecutively.  The amount will be allocated as follows;

Cost Amount Basis of apportioning bottling mixing Production control
materials 60000 actual 45,0000 10,000 5000
Managers salary 12000 Direct employees 120  x  12000 


= 9,600


25 x  12000


= 2000


5  x  12000


= 400


Labor costs 28000 direct of employees      200 X  24000


= 20,000

35 x  24000


= 3,500


5  x 24000 


= 500

The implication is that if the costs are to be allocated the manufacturing should be given a high share. Allocated costs increase the unit cost of the products. For example if the cost of the manager is not allocated then the product may sold a lower unit price which will result in the losses of the company. In this case the departmental costs are known easily and it assist the management in allocating the costs.

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