I.

Introduction

On May 8, 1886, Dr. John Pemberton brought his perfected syrup to Jacobs' Pharmacy in
downtown Atlanta where the first glass of Coca-Cola was poured. From that one iconic drink,
we’ve evolved into a total beverage company. More than 2.2 billion servings of our drinks are
enjoyed in more than 200 countries and territories each day.

We are constantly transforming our portfolio, from reducing added sugar in our drinks to
bringing innovative new products to market. We seek to positively impact people’s lives,
communities and the planet through water replenishment, packaging recycling, sustainable
sourcing practices and carbon emissions reductions across our value chain. Together with our
bottling partners, we employ more than 700,000 people, helping bring economic opportunity to
local communities worldwide.

Our purpose is to refresh the world and make a difference.

We are committed to offering people more of the drinks they want across a range of categories
and sizes while driving sustainable solutions that build resilience into our business and create
positive change for the planet.

Our Purpose:

Refresh the world. Make a difference.

Our Vision:

Our vision is to craft the brands and choice of drinks that people love, to refresh them in body &
spirit. And done in ways that create a more sustainable business and better shared future that
makes a difference in people’s lives, communities and our planet

The Coca-Cola Company and its bottling partners are collectively known as the Coca-Cola
system. The Coca-Cola Company does not own, manage or control most local bottling
companies.

In our concentrate operations, The Coca-Cola Company typically generates net operating
revenues by selling concentrates and syrups to authorized bottling partners.

Our bottling partners combine the concentrates with still and/or sparkling water, and/or
sweeteners, depending on the product, to prepare, package, sell and distribute finished beverages.

Our finished product operations consist primarily of company-owned or -controlled bottling,

sales and distribution operations.

Bottling Investments Group

In January 2006, our company owned bottling operations were brought together to form the
Bottling Investments Group, or BIG. BIG was created to ensure those bottling operations receive
the appropriate investments and expertise to ensure their long term success. By strategically
investing in select bottling operations, temporarily taking them under Coca-Cola ownership, and
utilizing the leadership and resources of The Coca-Cola Company, BIG can drive long-term
growth in critical markets and address major structural or investment challenges.

When an operation is stable and thriving, BIG’s goal is to find a qualified bottler to assume
operations and continue to grow the business. BIG is led by Murat Ozgel.

II. Costing System

The Coca-Cola Company uses a process cost system in its bottling plants because it
manufactures similar kinds of products. This means that the cost of final products is
the same. The process cost system also helps track the cost of the company's
beverages during production.

III. Manufacturing Cost Components: Direct Material, Direct Labor, Overheads

BUS 5111 - Leadership Discussion Forum Unit 2 Manufacturing Costs of Coca-Cola Coca-Cola
is a globally recognized brand known for its soft drinks that millions of people enjoy. The
production of Coca-Cola requires several manufacturing costs, including direct materials, direct
labor, and manufacturing overhead. This paper aims to examine Coca-Cola's manufacturing
costs, categorize them into the three manufacturing cost categories, and determine whether they
are variable, fixed, or mixed. Direct Materials Costs Coca-Cola's direct materials costs include
all the materials directly used in the production process, such as sugar, flavoring, and water
(Jiambalvo, 2018). These costs are variable as they are dependent on the volume of production.
As Coca-Cola produces such soft drinks, the cost of direct materials increases, and vice versa.
Thus, direct materials costs are a variable cost for Coca-Cola. Direct Labor Costs Direct labor
costs are the wages, benefits, and other expenses associated with the workers who directly
produce Coca-Cola's products (Kimmel,
Weygandt, & Kieso, 2019). These costs are also variable as they are linked to the production
volume. If Coca-Cola produces such soft drinks, it will need more workers, increasing direct
labor costs. Therefore, direct labor costs are a variable cost for Coca-Cola. Manufacturing
Overhead Costs Manufacturing overhead costs refer to all other costs associated with the
production process that cannot be directly attributed to direct materials or labor (Jiambalvo,
2018). These costs include the cost of factory utilities, depreciation on equipment, and indirect
labor costs. Manufacturing overhead costs are generally fixed costs as they do not change with
the production volume. However, some manufacturing overhead costs can be mixed costs if they
have both fixed and variable components. For example, the cost of factory utilities is a fixed cost
as it is relatively stable regardless of the production volume. Still, the cost of indirect labor, such
as supervisors and quality control personnel, may have fixed and variable components,
depending on the production volume. Thus, manufacturing overhead costs are a mixed cost for
Coca-Cola. Categorization of Manufacturing Costs Coca-Cola's manufacturing costs can be
categorized into three categories: direct materials, direct labor, and manufacturing overhead
(Financial Statements for Coca-Cola Company, 2021). Direct materials and direct labor costs are
variable costs as they change with the production volume.
IV. Financial performance (latest year available)
Coca-Cola Reports Fourth Quarter and Full-Year 2023 Results
Global Unit Case Volume Grew 2% for the Quarter and 2% for the Full Year
Net Revenues Grew 7% for the Quarter and 6% for the Full Year;
Organic Revenues (Non-GAAP) Grew 12% for the Quarter and 12% for the Full
Year

Operating Income Grew 10% for the Quarter and 4% for the Full Year; Comparable
Currency Neutral Operating Income (Non-GAAP) Grew 20% for the Quarter and
16% for the Full Year

Fourth Quarter EPS Declined 2% to $0.46; Comparable EPS (Non-GAAP) Grew

10% to $0.49; Full Year EPS Grew 13% to $2.47; Comparable EPS (Non-GAAP)
Grew 8% to $2.69

Cash Flow from Operations Was $11.6 Billion for the Full Year, Up 5%; Full-Year
Free Cash Flow (Non-GAAP) Was $9.7 Billion for the Full Year, Up 2%

Company Provides 2024

Financial Outlook ATLANTA, Feb. 13, 2024 – The Coca-Cola Company today
reported fourth quarter and full-year 2023 results. “During the year, our people and
partners rose to meet new challenges, allowing us to excel globally and deliver in a
dynamic world,” said James Quincey, Chairman and CEO of The Coca-Cola
Company. “As we begin a new year, we’re confident that our all-weather strategy,
powerful portfolio and harmonized system will continue to create value for our
stakeholders in 2024 and for the long term.” Highlights Quarterly / Full-Year
Performance

• Revenues: For the quarter, net revenues grew 7% to $10.8 billion, and organic
revenues (non-GAAP) grew 12%, driven by 9% growth in price/mix and 3% growth
in concentrate sales. The quarter included one additional day, which resulted in a 1-
point tailwind to revenue growth. For the full year, net revenues grew 6% to $45.8
billion, and organic revenues (non-GAAP) grew 12%, driven by 10% growth in
price/mix and 2% growth in concentrate sales. For both the quarter and the full year,
organic revenue (non-GAAP) performance was strong across all operating segments.

• Operating margin: For the quarter, operating margin was 21.0% versus 20.5% in
the prior year, while comparable operating margin (non-GAAP) was 23.1% versus
22.7% in the prior year. For the full year, operating margin was 24.7% versus 25.4%
in the prior year, while comparable operating margin (non-GAAP) was 29.1% versus
28.7% in the prior year.

Operating margin performance included items impacting comparability and currency

headwinds. For Exhibit 99.1 1 both the quarter and full year, comparable operating
margin (non-GAAP) expansion was primarily driven by strong topline growth,
partially offset by an increase in marketing investments versus the prior year, as well
as currency headwinds.

• Earnings per share: For the quarter, EPS declined 2% to $0.46, while comparable
EPS (non-GAAP) grew 10% to $0.49. EPS performance included the impact of a 14-
point currency headwind, while comparable EPS (non-GAAP) performance included
the impact of a 13-point currency headwind. For the full year, EPS grew 13% to
$2.47, and comparable EPS (non-GAAP) grew 8% to $2.69. EPS performance
included the impact of an 8-point currency headwind, while comparable EPS (non-
GAAP) performance included the impact of a 7-point currency headwind.

• Market share: For both the quarter and the full year, the company gained value
share in total nonalcoholic ready to-drink (NARTD) beverages.

• Cash flow: Cash flow from operations was $11.6 billion for the full year, an
increase of $581 million versus the prior year, driven by strong business performance
and working capital initiatives, partially offset by a transition tax payment and
currency headwinds. Free cash flow (non-GAAP) was $9.7 billion for the full year, an
increase of $213 million versus the prior year.