Cost Allocation and Transfer Pricing at PepsiCo

Requirements:

1. Implement an appropriate cost allocation method to allocate indirect costs among PepsiCo's various product lines (e.g., beverages, snacks, nutrition).

Product Line	Direct Costs ($)	Indirect Costs ($)
Beverages	8,000,000	3,200,000
Snacks	6,500,000	2,600,000
Nutrition	7,500,000	3,000,000

2. Determine transfer pricing for internal transactions between PepsiCo's manufacturing and distribution divisions.
3. Evaluate the impact of different transfer pricing methods (e.g., market-based, cost-plus) on profitability.
4. Recommend a transfer pricing policy that aligns with corporate strategy and minimizes tax liabilities.