Question

Cost of Sales and Gross Margin 2018 compared with 2017 Cost of sales increased 3.8% in 2018 compared with 2017. The increase was driven by higher sales volume, higher freight and logistics costs and additional plant costs. These drivers were partially offset by an incremental $125.1 million favorable impact from marking-to-market our commodity derivative instruments intended to economically hedge future years' commodity purchases and supply chain productivity, Gross margin decreased by 10 basis points in 2018 compared with 2017. The decrease was primarily due to the higher freight and logistics costs, unfavorable product mix, additional plant costs related to new production lines, and incremental trade promotional expense. These factors were partially offset by the favorable year-over-year mark-to-market impact from commodity derivative instruments and supply chain productivity.

A manufacturing firm, such as The Hershey Company, typically has a substantial long-term investment in which type of assets? See Exhibit B below.

1. Inventories
2. Prepaid Expenses
3. Property, plant and equipment
4. Accounts Receivable

Answer 1

Any Manufacturing Company like Hershey Company, generally has a substantial long term investment in Property, plant and Equipment. Because to survive a manufacturing company, it should produce products and sale it. To produce product is needs machinery, plant and equipment. That's why a manufacturing firm or company substantially invests more in Property, Plant and Equipment. So, Option c is Correct Answer.