Flexible budgeting of Coca-Cola Company

Company Name: COCA COLA

Flexible Budget for 2013

 

 

INCREASE IN SALES 2 %

INCREASE IN SALES 5 %

INCREASE IN SALES 10 %

CONTENTS

Year 2011

Year 2013

Year 2013

Year 2013

In Millions of USD (except for per share items)

Dec 31st

Dec 31st

Dec 31st

Dec 31st

Total Revenue

46,542.00

47472.84

48869.1

51196.2

Cost Of Goods Sold

18,216.00

18325.296

18489.24

18762.48

Gross Profit

28,326.00

29147.544

30379.86

32433.72

Selling/General/Admin. Expenses, Total

17,440.00

17,788.80

18,312.00

19,184.00

Other Operating Charges

732

746.64

768.6

805.2

Operating Income

10,154.00

10,612.10

11,299.26

12,444.52

Interest income

483.00

483.00

483.00

483.00

Interest expense

417.00

417.00

417.00

417.00

Equity income (loss) — net

690.00

690.00

690.00

690.00

Other income (loss) — net

529.00

529.00

529.00

529.00

Income Before Tax

11,439.00

11,897.10

12,584.26

13,729.52

Income Tax

2,805.00

2,917.33

3,085.83

3,366.67

Consolidated Net Income

8,634.00

8,979.77

9,498.43

10,362.85

 

 

 

 

 

 

 

 

 

 

Assumption : Cost Of Goods Sold has 30% of Variable Cost and 70 % of Fixed Cost

 

 

 

 

variable cost (30% of COGS)

5464.8

5574.096

5738.04

6011.28

Fixed Cost (70% of COGS)

12751.2

12751.2

12751.2

12751.2

Tax %age of 2012

24.52137425

 

 

 

Selling/General/Admin. Expenses, Total %age of 2011

37.47153109

 

 

 

Other Operating Charges % of 2011

1.572772979

 

 

 

Assumptions:The budget is forecasted on the basis of following assumptions:-Sales volume of 2012 is projected for 2% increase, 5% and 10%-Cost of Goods Sold of 2012 is broken in 70% and 30% ration of Fixed Cost and Variable Cost correspondingly.-Selling General & Admin expenses are also increased at the rate of 2%, 5% and 10% respectively.

Answer No 1:The growth rate in sales of past three years is not consistent. It is given below,

Year 2012

Year 2011

Year 2010

Year 2009

Dec 31st

Dec 31st

Dec 31st

Dec 31st

Sales

48,017.00

46,542.00

35,119.00

30,990.00

Growth Rate

3%

33%

13%

 

Answer No 2:

COMPARISON OF REVENUE GROWTH AND EXPENSES GROWTH

 

Year 2011

Year 2010

Year 2009

12 months ending Dec 31st

Sales

46542

35119

30990

Interest income

483

317

249

Equity income (loss) — net

690

1025

781

Other income (loss) — net

529

5185

40

Total Revenue

48244

41646

32060

Cost Of Goods Sold

18216

12693

11088

Selling/General/Admin. Expenses, Total

17440

13158

11358

Other Operating Charges

732

819

313

Interest expense

417

733

355

Income Tax Expense

2805

2384

2040

Total Expenses

39610

29787

25154

Year 2011

Year 2010

Dec 31st

Dec 31st

Growth Rate Of Revenue

16%

30%

Growth Rate Of Expenses

33%

18%

No, the Revenues and Expenses are not growing at the same rate.The Past experience shows that, In 2010, the Revenues increased at a larger rate comparatively to the Expenses. In 2011, the Revenues decreased at a larger comparatively to the Expenses.

Answer No 3:The quarterly GDP growth of American economy is as follows,Quarter 4 2012 GDP: (-0.1%)

Reduction in Federal military spending contributed to an economic contraction of .1%.

Quarter 3 2012 GDP: 3.1%

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