Here is a brief description of Hershey if you are not familiar. Hershey is a global confectionery leader known for bringing goodness to the world through chocolate, sweets, mints and other great tasting snacks. We are the largest producer of quality chocolate in North America, a leading snack maker in the United States and a global leader in chocolate and non-chocolate confectionery. We market, sell and distribute our products under more than 80 brand names in approximately 80 countries worldwide Here is the explanation of why profits increased from the prior year North America The North America segment is responsible for our chocolate and non-chocolate confectionery market position, as well as our grocery and growing snacks market positions, in the United States and Canada. This includes developing and growing our business in chocolate and non-chocolate confectionery, pantry, food service and other snacking product lines North America accounted for 88.1%, 87.8% and 87.6% of our net sales in 2017, 2016 and 2015, respectively. North America results for the years ended December 31, 2017, 2016 and 2015 were as follows: Percent Change 2017 For the years ended 2016 Vs December 31, 2017 2016 2015 2016 2015 In millions of dollars Net sales $6,6212 $6,533.0 $6,468.1 1.3% 1.0 % Segment income 2,045.6 2,041.0 2,074,0 0.2% (1.6)% Segment margin 30.9% 31.29 32.1% VS 2017 compared with 2016 Net sales of our North America segment increased $88.2 million or 1.3% in 2017 compared to 2016, driven by increased volume of 0.5% due to a longer Easter season, as well as 2017 innovation, specifically, Hershey's Cookie Layer Crunch, and the launch of Hershey's Gold and Hershey's and Reese's Popped Snack Mix and Chocolate Dipped Pretzels. Additionally, the barkTHINS brand acquisition contributed 0.3%. Net price realization increased by 0.4% due to decreased levels of trade promotional spending. Excluding the favorable impact of foreign currency exchange rates of 0.1%, the net sales of our North America segment increased by approximately 1.2%. Our North America segment income increased $4.6 million or 0.2% in 2017 compared to 2016, driven by higher gross profit, partially offset by investments in greater levels of advertising expense and go-to-market capabilities, as well as unfavorable manufacturing variances and higher freight and warehousing costs As a student, you may be wondering why companies have all these budget variances. Why can't these businesses do better at forecasting? Consider the following information for The Hershey Company regarding why their income increased. Which of the following items should managerial accountants have been able to forecast? Why/Why not? 1. A longer Easter season Should have been included in the budget? (Yeso) Why? 2. Launch of new products, "Hershey's Gold" and "Popped Snack Mix (Hershey's and Reese's)" Should have been included in the budget? (Yeso) O Why? 3. Acquisition of barkThins brand Should have been included in the budget? (Yeso) Why? 4. Greater level of investment in advertising expense. Should have been included in the budget? (Yeso) Why? 5. Higher freight and warehousing costs. Should have been included in the budget? (Yeso) Why
