Question

How does relevant costing and responsibility accounting impact the Pepsi Company? How is it important?

Answer 1

Cost accounting is meant for analysing the total cost of production by the assessment of the fixed and variable costs.

For the Pepsi company, this costing accounting has a great impact.

Its importance are -

• It helps the management to take proper decisions on the cost control of the Pepsi products. Management assesses the cost incurred in the manufacturing of the product and the selling cost set for the products accordingly to make profits.
• The investors willing to spend or invest in the pepsi company would be getting the information regarding the earning capacity of the company and they could decide whether this would be beneficial in investing in the Pepsi company or not.
• Costing accounting helps to set the cost of products at optimal price. When pepsi product is being manufactured at a rate comparatively low than other soft drinks, it will be more in demand due to low cost and hence will be profited by this.

Responsibility accounting refers to a controlling system for costing in a firm.

Its importance in the firm are as follows :

• Employees are trained and evaluated on their performance which will create efficiency among the employees. Company also rewards employees will urges other employees to perform better.
• The results which are obtained, company evaluates those results with the results pre set and it helps to check whether the set goals are met or not.
• The company helps to make the budgets of the financial year and compare it with previous year's and it helps to set the budgets of the next year.
• The higher management of the company develops their strategies and goals for the entire organization. It helps to build the base for the company and set rules to which whole organisation will follow in order to obtain a certain goal.

These are the importance of both the costing and responsibility accounting that impacts the Pepsi company.