Pepsico, Inc.- Frito-Lay North America

PepsiCo, Inc.- Frito-Lay North America

Lay’s potato chip is considered one of the top popular snacks in the United State. Lay’s is sold all around the world; it is one of the best selling of several products in the business segment of Frito-Lay North America of PepsiCo besides Doritos tortilla chips, Cheetos chess-favored snacks, Tostitos tortilla chips, branded dips, Ruffle potato chips, Fritos corn chips, and Santitas tortilla chips. Frito-Lay is specializing in producing and selling branded snacks in North America territory.

Managerial Accounting Analysis of Frito-Lay North America Segmentation

The net revenue of Frito-Lay North America increased every year over the period 2012-2014 with $13.6 billion, $14.1 billion and $14.5 billion respectively and 2014’s revenue is equivalent to 22% of total net revenue of the whole company.

Frito-Lay’s success through outstanding revenue over years triggers my interest to know the insights of its accounting managerial perspectives. In addition, the different channels of distribution of the products to wholesales and retailers also give me the chance to study about various pricing strategies the company has deployed to capture a sustainable profit. Due to the annual financial statements of PepsiCo Inc. does not show separate figures of Lay’s potato chips, the product will be consolidated with other snacks as a single snack for analysis in accordance with the financial figures of Frito-Lay North America segmentation of PepsiCo, Inc. The company’s cost mechanism will be compared to its competitor Kellogg’s U.S. snacks segment to dig into comparable managerial accounting aspects for a clear picture of their performances based on their 2014 annual financial reports.

Manufacturing Facilities

Based on the data from PepsiCo’s annual financial statements 2014 as stated above, Frito-Lay segmentation has more than 40 manufacturing operations and 1,700 warehouses, distribution offices, sales centers and other supporting...