QUESTION NO. 1:(A). Are sweeteners and packaging a variable cost or a fixed cost? What is the impact on the contribution margin of an increase in the unit cost of sweeteners or packaging? What are the implications on profitability? Sweeteners and packaging are considered a fixed cost only for bottling companies (not for the Coca-Cola company). This is mainly due to their main function, i.e.; the sweetening and packaging of Coca Cola cans and bottles. Here, bottlers will receive only the active constituents (gallon shipments) from the Coca-Cola Company, which contain syrups and concentrates, after which they can directly begin the process of sweetening and packaging each can (or bottle). It is believed that the costs of the sweetening and packaging procedure are mandatory for bottlers, regardless of the total amount of sales made. Fixed costs are the costs associated with the product that must be paid no matter how much volume you sell, no matter how much you sell or don't sell, you have to pay fixed costs (http://www.bizfinance.about .com, 2014). When there is an increase in the unit cost of fixed sweetening and packaging materials, this will directly lead to an increase in the unit cost of the finished product (coca cane or bottle). This could severely impact the company by reducing the total number of products sold and could lead to losing competition in the market to other less expensive products, so the contribution margin will immediately decrease (even if variable costs remain constant). An increase in fixed costs adds to the overall cost. This would reduce how much the company earns from operations if the contribution margin is low. Such a low contribution ratio means that a company... half the paper... packaging process will only be performed by bottlers. This could result in an increase in the company's chances of making more profits, because they can make more money by wholesaling concentrates and syrups first in gallons and then through any bottles or cans containing their trade name sold in whole the world. This will definitely make them compete very strongly in global markets. This was considered a very useful way to spread the company's (Coca Cola) trade name and brand more widely throughout the world. This will lead to opening new markets in which to sell their products, thus strengthening their reputation in the international market. - New opportunities will be created for people around the world, who do not have jobs, to obtain a position within bottling companies, which will help eliminate the unemployment problem in these countries.