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Coca-Cola Company produces two types of beverages, Coke and Diet Coke. The following cost data is available: Cost Item Coke Diet Coke Direct Material $0.5/unit
Coca-Cola Company produces two types of beverages, Coke and Diet Coke. The following cost data is available:
Cost Item | Coke | Diet Coke |
Direct Material | $0.5/unit | $0.6/unit |
Direct Labor | $0.2/unit | $0.25/unit |
Overhead | 180% of direct labor cost | 160% of direct labor cost |
Additional Information:
- Production for Coke: 1,000,000 units
- Production for Diet Coke: 800,000 units
Requirements:
- Calculate the total cost for Coke and Diet Coke.
- Determine the cost per unit for each product.
- Prepare a cost sheet for both products.
- Analyze the cost structure and suggest which product is more cost-effective.
- Discuss the implications of cost structure on pricing strategy.
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