Publicly traded manufacturing company - Kimberly Clark Corporation (KMB). 

Go to their website and read about their products and operations. Then in your post list five costs that the company would incur. Explain what type of cost behavior you believe would be appropriate for each of these cost items. Please be sure to include a link to the company’s website in your post.

 

KIMBERLY-CLARK MANUFACTURING CORPORATION

Kimberly-Clark Manufacturing Company is the home to personal household items such as Kleenex, Scott, Kotex, and Huggies (Kimberly-Clark, n.d.). It operates in different industries and produces for a variety of markets. Kimberly-Clark incurs these five common costs in manufacturing its product. The cost behavior would be determined based on the level of business activity which in this case, is the volume of production. First, raw materials such as wood pulp and recycled fibers. Raw materials are inventoriable costs and can affect inventory, if not yet used as at the end of the period or are part of Cost of Goods Sold when the product associated becomes sold. Raw materials behave as a variable cost, it changes in direct proportion with the production volume. Second, salaries and wages expenses can come from many sources such as employees working in the factory, accounting, human resources, and salesperson. Its cost behavior depends on what department the expenses are being incurred from. Wages of factory workers are commonly paid per hour or output basis is a variable cost since it would increase in proportion to the demand for production. Whereas salaries from support departments are considered fixed as its total would remain the same regardless of the volume of production. Third, marketing expenses are expected to be incurred by the multinational company for positioning themselves in the market and achieving strategic plans. Based on the 2020 consolidated financial statements, the marketing, research expenses of the entity are equal to 18% of its total net sales (Kimberly Clark, 2020). These costs are considered fixed costs. This does not mean that such expenditures are fixed in amount over the years; this simply means that these total expenses will be incurred at the said amounts irrespective of the volume produced. Fourth, depreciation is commonly incurred due to the existence of properties, plant, and equipment used by the entity. Since Kimberly-Clark uses straight-line method of depreciation, it will remain fixed over the years unless revaluated. However, for some that might be using units of production method such as mining companies, depreciation expense can be a variable cost. Lastly, utility expenses such as for electricity consumed during the production of Kleenex. These expenses are usually mixed cost which means that it has the quality of both fixed and variable cost. There is a fixed base amount that the company must pay for and from there, it would increase according to use in the production.