1-Review the Financial Statements for PepsiCo, Inc. in Appendix A in the back of your text. How does the company account for the costs of moving, storing and delivering the finished product?

2-What type of cost accounting system would be best suited to this type of business (job order or process costing) and why?

appendix A

Consolidated Statement of Income PepsiCo, Inc. and Subsidiaries Fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011 (in millions except per share amounts)
	2013	2012	2011
Net Revenue	$ 66,415	$ 65,492	$ 66,504
Cost of sales	31,243	31,291	31,593
Selling, general and administrative expenses	25,357	24,970	25,145
Amortization of intangible assets	110	119	133
Operating Profit	9,705	9,112	9,633
Interest expense	(911)	(899)	(856)
Interest income and other	97	91	57
Income before income taxes	8,891	8,304	8,834
Provision for income taxes	2,104	2,090	2,372
Net income	6,787	6,214	6,462
Less: Net income attributable to noncontrolling interests	47	36	19
Net Income Attributable to PepsiCo	$ 6,740	$ 6,178	$ 6,443
Net Income Attributable to PepsiCo per Common Share
Basic	$ 4.37	$ 3.96	$ 4.08
Diluted	$ 4.32	$ 3.92	$ 4.03
Weighted-average common shares outstanding
Basic	1,541	1,557	1,576
Diluted	1,560	1,575	1,597
Cash dividends declared per common share	$ 2.24	$ 2.1275	$ 2.025

See accompanying notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income PepsiCo, Inc. and Subsidiaries Fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011 (in millions)
		2013
	Pre-tax amounts	Tax amounts	After-tax amounts
Net income			$ 6,787
Other Comprehensive Income
Currency translation adjustment	$ (1,303)	$	(1,303)
Cash flow hedges:
Reclassification of net losses to net income	45	(17)	28
Net derivative losses	(20)	10	(10)
Pension and retiree medical:
Net prior service cost	(23)	8	(15)
Net gains	2,540	(895)	1,645
Unrealized gains on securities	57	(28)	29
Other		(16)	(16)
Total Other Comprehensive Income	$ 1,296	$ (938)	358
Comprehensive income			7,145
Comprehensive income attributable to noncontrolling interests			(45)
Comprehensive Income Attributable to PepsiCo			$ 7,100
		2012
	Pre-tax amounts	Tax amounts	After-tax amounts
Net income			$ 6,214
Other Comprehensive Income
Currency translation adjustment	$ 737	$	737
Cash flow hedges:
Reclassification of net losses to net income	90	(32)	58
Net derivative losses	(50)	10	(40)
Pension and retiree medical:
Net prior service cost	(32)	12	(20)
Net losses	(41)	(11)	(52)
Unrealized gains on securities	18		18
Other		36	36
Total Other Comprehensive Income	$ 722	$ 15	737
Comprehensive income			6,951
Comprehensive income attributable to noncontrolling interests			(31)
Comprehensive Income Attributable to PepsiCo			$ 6,920
		2011
	Pre-tax amounts	Tax amounts	After-tax amounts
Net income			$ 6,462
Other Comprehensive Loss
Currency translation adjustment	$ (1,464)	$	(1,464)
Cash flow hedges:
Reclassification of net losses to net income	5	4	9
Net derivative losses	(126)	43	(83)
Pension and retiree medical:
Net prior service cost	(18)	8	(10)
Net losses	(1,468)	501	(967)
Unrealized losses on securities	(27)	19	(8)
Other	(16)	5	(11)
Total Other Comprehensive Loss	$ (3,114)	$ 580	(2,534)
Comprehensive income			3,928
Comprehensive income attributable to noncontrolling interests			(84)
Comprehensive Income Attributable to PepsiCo			$ 3,844

See accompanying notes to consolidated financial statements.

Consolidated Statement of Cash Flows PepsiCo, Inc. and Subsidiaries Fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011 (in millions)
	2013	2012	2011
Operating Activities
Net income	$ 6,787	$ 6,214	$ 6,462
Depreciation and amortization	2,663	2,689	2,737
Stock-based compensation expense	303	278	326
Merger and integration costs	10	16	329
Cash payments for merger and integration costs	(25)	(83)	(377)
Restructuring and impairment charges	163	279	383
Cash payments for restructuring charges	(133)	(343)	(31)
Restructuring and other charges related to the transaction with Tingyi		176
Cash payments for restructuring and other charges related to the transaction with Tingyi	(26)	(109)
Non-cash foreign exchange loss related to Venezuela devaluation	111
Excess tax benefits from share-based payment arrangements	(117)	(124)	(70)
Pension and retiree medical plan contributions	(262)	(1,865)	(349)
Pension and retiree medical plan expenses	663	796	571
Deferred income taxes and other tax charges and credits	(1,058)	321	495
Change in accounts and notes receivable	(88)	(250)	(666)
Change in inventories	4	144	(331)
Change in prepaid expenses and other current assets	(51)	89	(27)
Change in accounts payable and other current liabilities	1,007	548	520
Change in income taxes payable	86	(97)	(340)
Other, net	(349)	(200)	(688)
Net Cash Provided by Operating Activities	9,688	8,479	8,944
Investing Activities
Capital spending	(2,795)	(2,714)	(3,339)
Sales of property, plant and equipment	109	95	84
Acquisition of WBD, net of cash and cash equivalents acquired			(2,428)
Investment in WBD			(164)
Cash payments related to the transaction with Tingyi	(3)	(306)
Other acquisitions and investments in noncontrolled affiliates	(109)	(121)	(601)
Divestitures	133	(32)	780
Short-term investments, by original maturity
More than three months - maturities			21
Three months or less, net	61	61	45
Other investing, net	(21)	12	(16)
Net Cash Used for Investing Activities	(2,625)	(3,005)	(5,618)
Financing Activities
Proceeds from issuances of long-term debt	$ 4,195	$ 5,999	$ 3,000
Payments of long-term debt	(3,894)	(2,449)	(1,596)
Debt repurchase			(771)
Short-term borrowings, by original maturity
More than three months - proceeds	23	549	523
More than three months - payments	(492)	(248)	(559)
Three months or less, net	1,634	(1,762)	339
Cash dividends paid	(3,434)	(3,305)	(3,157)
Share repurchases - common	(3,001)	(3,219)	(2,489)
Share repurchases - preferred	(7)	(7)	(7)
Proceeds from exercises of stock options	1,123	1,122	945
Excess tax benefits from share-based payment arrangements	117	124	70
Acquisition of noncontrolling interests	(20)	(68)	(1,406)
Other financing	(33)	(42)	(27)
Net Cash Used for Financing Activities	(3,789)	(3,306)	(5,135)
Effect of exchange rate changes on cash and cash equivalents	(196)	62	(67)
Net Increase/(Decrease) in Cash and Cash Equivalents	3,078	2,230	(1,876)
Cash and Cash Equivalents, Beginning of Year	6,297	4,067	5,943
Cash and Cash Equivalents, End of Year	$ 9,375	$ 6,297	$ 4,067

See accompanying notes to consolidated financial statements.

Consolidated Balance Sheet PepsiCo, Inc. and Subsidiaries December 28, 2013 and December 29, 2012 (in millions except per share amounts)
	2013	2012
ASSETS
Current Assets
Cash and cash equivalents	$ 9,375	$ 6,297
Short-term investments	303	322
Accounts and notes receivable, net	6,954	7,041
Inventories	3,409	3,581
Prepaid expenses and other current assets	2,162	1,479
Total Current Assets	22,203	18,720
Property, Plant and Equipment, net	18,575	19,136
Amortizable Intangible Assets, net	1,638	1,781
Goodwill	16,613	16,971
Other nonamortizable intangible assets	14,401	14,744
Nonamortizable Intangible Assets	31,014	31,715
Investments in Noncontrolled Affiliates	1,841	1,633
Other Assets	2,207	1,653
Total Assets	$ 77,478	$ 74,638
LIABILITIES AND EQUITY
Current Liabilities
Short-term obligations	$ 5,306	$ 4,815
Accounts payable and other current liabilities	12,533	11,903
Income taxes payable		371
Total Current Liabilities	17,839	17,089
Long-Term Debt Obligations	24,333	23,544
Other Liabilities	4,931	6,543
Deferred Income Taxes	5,986	5,063
Total Liabilities	53,089	52,239
Commitments and contingencies
Preferred Stock, no par value	41	41
Repurchased Preferred Stock	(171)	(164)
PepsiCo Common Shareholders' Equity
Common stock, par value 1 per share (authorized 3,600 shares, issued, net of repurchased common stock at par value: 1,529 and 1,544 shares, respectively)	25	26
Capital in excess of par value	4,095	4,178
Retained earnings	46,420	43,158
Accumulated other comprehensive loss	(5,127)	(5,487)
Repurchased common stock, in excess of par value (337 and 322 shares, respectively)	(21,004)	(19,458)
Total PepsiCo Common Shareholders' Equity	24,409	22,417
Noncontrolling interests	110	105
Total Equity	24,389	22,399
Total Liabilities and Equity	$ 77,478	$ 74,638

See accompanying notes to consolidated financial statements.

Consolidated Statement of Equity PepsiCo, Inc. and Subsidiaries Fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011 (in millions)
	2013		2012		2011
	Shares	Amount	Shares	Amount	Shares	Amount
Preferred Stock	0.8	$ 41	0.8	$ 41	0.8	$ 41
Repurchased Preferred Stock
Balance, beginning of year	(0.6)	(164)	(0.6)	(157)	(0.6)	(150)
Redemptions		(7)		(7)		(7)
Balance, end of year	(0.6)	(171)	(0.6)	(164)	(0.6)	(157)
Common Stock
Balance, beginning of year	1,544	26	1,565	26	1,582	26
Repurchased common stock	(15)	(1)	(21)		(17)
Balance, end of year	1,529	25	1,544	26	1,565	26
Capital in Excess of Par Value
Balance, beginning of year		4,178		4,461		4,527
Stock-based compensation expense		303		278		326
Stock option exercises/RSUs and PEPUnits converted(a)		(287)		(431)		(361)
Withholding tax on RSUs converted		(87)		(70)		(56)
Other		(12)		(60)		25
Balance, end of year		4,095		4,178		4,461
Retained Earnings
Balance, beginning of year		43,158		40,316		37,090
Net income attributable to PepsiCo		6,740		6,178		6,443
Cash dividends declared - common		(3,451)		(3,312)		(3,192)
Cash dividends declared - preferred		(1)		(1)		(1)
Cash dividends declared - RSUs		(26)		(23)		(24)
Balance, end of year		46,420		43,158		40,316
Accumulated Other Comprehensive Loss
Balance, beginning of year		(5,487)		(6,229)		(3,630)
Currency translation adjustment		(1,301)		742		(1,529)
Cash flow hedges, net of tax:
Reclassification of net losses to net income		28		58		9
Net derivative losses		(10)		(40)		(83)
Pension and retiree medical, net of tax:
Reclassification of net losses to net income		230		421		133
Remeasurement of net liabilities and translation		1,400		(493)		(1,110)
Unrealized gains/(losses) on securities, net of tax		29		18		(8)
Other		(16)		36		(11)
Balance, end of year		(5,127)		(5,487)		(6,229)
Repurchased Common Stock
Balance, beginning of year	(322)	(19,458)	(301)	(17,870)	(284)	(16,740)
Share repurchases	(37)	(3,000)	(47)	(3,219)	(39)	(2,489)
Stock option exercises	20	1,301	24	1,488	20	1,251
Other	2	153	2	143	2	108
Balance, end of year	(337)	(21,004)	(322)	(19,458)	(301)	(17,870)
Total PepsiCo Common Shareholders' Equity		24,409		22,417		20,704
Noncontrolling Interests
Balance, beginning of year		105		311		312
Net income attributable to noncontrolling interests		47		36		19
Distributions to noncontrolling interests, net		(34)		(37)		(24)
Currency translation adjustment		(2)		(5)		65
Acquisitions and divestitures		(6)		(200)		(57)
Other, net						(4)
Balance, end of year		110		105		311
Total Equity		$ 24,389		$ 22,399		$ 20,899

^(a)Includes total tax benefits of $45 million in 2013, $84 million in 2012 and $43 million in 2011.See accompanying notes to consolidated financial statements.