The paper "How Accurate and Efficient Are the Coca Cola's Accounting Approaches and Schemes" is a good example of an assignment on finance and accounting. Coca Cola Company is by fact, design and default one of the most decorated manufacturing companies of our times. Thus, it would go without saying that its accounting approaches and patterns must be accurate and technological. As much as there are several things and dynamics that have changed over the years, Coca-cola as a company has endeavored to use one of the most progressive systems in both manufacturing and accounting aspects. Subsequently, we conducted a visit into the company to inquire on the modalities and approaches that are used by the company in its operations. Thus, below are some of the guiding principles, questions, and borderlines that we based our question on when we paid a visit to the company.
1. Firstly, it was the question of what system the company did use to allocate overhead?
Coca-cola as a company is conventional, conservative and traditional in this line of perspective because it uses the QuickBooks systems. This stems from the fact that QuickBooks is widely used by the other established companies around the world due to its convenience. At the face value, the QuickBooks is beneficial since it offers a higher spectrum of speed and control during the process of accounting. Similarly, it offers a wide array of advantages such as tracking fixed assets, it is easier to learn and master, and it can be customized to fit the requirement and specification of the customers.
We also gathered that the system was convenient because of the large number of users within the company thus, accountability was critical and key. For instance, there is an elaborate and secure system of username and password, which ensures that only the designated user can log in and operate. Thus, the huge personnel and staff workers are sufficiently covered in this respect and line of thought.
2. Secondly, we probed the question of whether they felt satisfied and content with the system?
On the general scale and spectrum, the accounting department and its head were satisfied that QuickBooks offered a comprehensive set of services. This is due to the fact that the allocations are based on departmental needs, in terms of hours each one would require. It is practically impossible for the system of QuickBooks to be without errors or drawbacks, rather, the analysis on the costs and benefits convince the company to stick with QuickBooks. Given the fact that the Coca-cola company is a big company with several departments and service areas, the overheard allocations would then be done on some formula such as the hours used and subsequent percentages. This explains the logic and the argument why the company has incorporated aspects of activity-based costing, to serve it in this nature and line of operation. For instance, the expense category is exhaustive so as to include all the costs which are overhead in nature, but was incurred during transactions and business.
3. The third question was to inquire from them what might have led them to adopt this approach?
To begin with, the accounting department was very articulate and clear that the company has been in operations, manufacturing, and service for a long period of time. It is needless to stress and over-emphasize the fact that the coca-cola company has been in existence for a long period of time. Thus, at the time of its formation, the most common business practice was allocation based on department. Just as the old adage goes that “one does change the winning team,” the Coca Cola Company has been true in this line of reasoning. The departmental mode of allocation has been working for all the years, thus, there has been no need to change it.
4. At this level and stage, we then inquired from them, all of them use the same system of allocation for the purposes of control?
The response we got was in the positive affirmative, so as to ensure there is uniformity, which would be critical in checks and balances. Thus, very few accredited accountants are allowed access to QuickBooks which reduces the chances of unaccountability, conclusively the controls are staged as strong and worth.
5. Subsequently, we asked if they are not using the activity-based costing, is there a prospect that might benefit by doing so? Give reasons for your response.
The profits accrued over the man-hours, over the square footage is the used unit of measure. This is to say that the profits accrued are compared over the locations and the department-given that the Coca Cola Company has several of them (Pendergrast 23). The activity-based costing is more elaborate because it does not just use the departments as the base of cost. In retrospect, the company would be forced to consider the cost per person rather than just allocating or assigning a cost per person. It goes without saying that such a process is a detailed one which would also incur some costs, time and effort on its which the Coca Cola Company would rather invest somewhere else.