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PepsiCo has the following cost information for its beverage lines: Pepsi, Mountain Dew, and Gatorade: Beverage Direct Materials Direct Labor Overhead Rate (% of Direct

PepsiCo has the following cost information for its beverage lines: Pepsi, Mountain Dew, and Gatorade:

Beverage

Direct Materials

Direct Labor

Overhead Rate (% of Direct Labor)

Pepsi

$8,000,000

$4,000,000

140%

Mountain Dew

$9,000,000

$4,500,000

140%

Gatorade

$10,000,000

$5,000,000

140%

Requirements:

  1. Compute the total manufacturing cost for each beverage.
  2. Determine the overhead costs applied to each beverage.
  3. Prepare a cost of goods manufactured statement for PepsiCo.
  4. Calculate the profit margin if the selling prices are $1.50, $1.75, and $2.00 per unit for Pepsi, Mountain Dew, and Gatorade, respectively.
  5. Discuss the impact of manufacturing costs on the overall profitability.

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