Coca-Cola has the following cost details for its beverage lines: Coke, Sprite, and Fanta:

• Coke:
  • Direct Materials: $15,000,000
  • Direct Labor: $6,000,000
  • Overhead Rate: 150%
• Sprite:
  • Direct Materials: $12,000,000
  • Direct Labor: $5,000,000
  • Overhead Rate: 150%
• Fanta:
  • Direct Materials: $10,000,000
  • Direct Labor: $4,000,000
  • Overhead Rate: 150%

Requirements:

1. Compute the total manufacturing cost for each beverage.
2. Determine the overhead costs applied to each beverage.
3. Prepare a detailed cost analysis for Coca-Cola.
4. Calculate the profit margin if the selling prices are $1.20, $1.10, and $1.00 per unit for Coke, Sprite, and Fanta, respectively.
5. Discuss the implications of cost allocation on pricing and profitability.