ACC650_T7.docx Exercise 8-27 Absorption and Variable Costing Grand Canyon University:

ACC650_T7.docx    Exercise 8-27 Absorption and Variable Costing  Grand Canyon University: ACC650  EXERCISE 8-27  Introduction  Today, Coca-Cola is a global business which consist of the Coca-Cola company and nearly 225 bottling partners worldwide (Coca-Cola, 2020). Coca-Cola markets, manufactures, and sells beverage concentrates and syrups. The company also sells finished beverages which include sparking soft drinks; water and sports drinks; juice, dairy, and plant-based drinks; and tea and coffee (Coca-Cola, 2020).Typically,the company generates its net operating revenues by selling concentrates and syrups to authorized bottling partners.These partners then combine the concentrates with still and/or sparkling water, and/or sweeteners, depending on the product, to prepare, package and sell and distribute finished beverages (Coca-Cola, 2020).  Considering Coca-Colas products and operations we will discuss the pros and cons of absorption and variable costing as the basis for product costing.Both costing methods have advantages and disadvantages, and a company must choose which accounting system fits their needs. In the following section, the pros and cons of absorption and variable costing as the basis for product costing will be discussed.  Pros and Cons of Absorption Costing  The pros of using absorption costing:  1.The main pro is that absorption costing complies with GAAP.  2.It can be more accurate when tracking profits, this would be even more beneficial prior to the holiday seasons when