Question

Think of a company (firm) that you’d like to know more about. Research it by reading a few articles about it in the Internet. Then, post the following:

The company’s name

Its major product (or product lines). Cite only the most important ones.

Discuss what you believe might be two of its most important fixed costs in the short run.

Discuss what you believe might be two (2) of its most important variable costs.

Answer 1

Company Name: The Coca-Cola Company

Famous Products: Non-alcoholic beverages including Coca-cola, Sprite, Minute Maid, Fanta, among others.

Fixed Costs:  rent and lease payments for manufacturing facilities across all the countries where it has its facilities because it has to pay rent and lease payments for all its manufacturing facilities without which it cannot own or lease its plants and cannot produce products; salaries paid to the executive level employees because the executive employees include the management and other senior level people who run the company and look after its day to day operations. At any point in time such employees will be employed by the company and hence a fixed cost.

Variable Costs: costs of raw materials including plastic, glasses for bottling of the beverages - depending on the production level the costs of raw materials procured will vary; distribution charges for distribution of products to groceries, supermarkets, stores and etc. Depending on the distribution channel and strategy the distribution costs for the company will change.

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