INSTRUCTIONS:

Answer the following questions.

1. In your opinion, are Coca-Cola's marketing expenditures a fixed cost, variable cost, or mixed cost? Give justification for your answer.

2. Are sweeteners and packaging a variable cost or fixed cost? What is the impact on the contribution margin of an increase in the per unit cost of sweeteners or packaging? What are the implications for profitability?

3. Which of the two measures cited for measuring volume represents the activity index? Why might Coca-Cola use two different measures?