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Dabur India Limited is an Indian multinational company with headquarters in Ghaziabad. The company manufactures Ayurvedic medicine and natural consumer products. Currently, the company has 8 brands in its portfolio, including Dabur Chyawanprash, Dabur Honey, Dabur PudinHara, Dabur Lal Tail and Dabur Honitus in the Healthcare space; Dabur Amla and Dabur Red Paste in the Personal Care category; and Réal in the Food & Beverages category (Dabur). Dabur operates in such consumer products categories as Hair Care, Oral Care, Health Care, Skin Care, Home Care and Foods. The products of the company are today available in more than 120 countries around the world. The company is based on the promotion of traditional products combined with the application of modern science. The vision of Dabur is to be “dedicated to the health and well being of every household” (Dabur). The mission of the company is based on several key principles, including passion for winning, people development, consumer focus, team work, innovation and integrity.
Dabur India Limited produces consumer products in various categories. First of all, the company manufactures health care products, including dietary health supplements, natural health products, food supplements, digestive, OTC-health care, ayurveda medicines, and traditional herbal medicinal products. The company also produces hair care such as hair oils (alma, almond, jasmine, coconut), shampoo (anti-dandruff, hair fall control, smooth and shine), as well as conditioner, hair mask, hair gel, wax and cream. Dabur manufactures oral care products (toothpaste, mouthwash, denture adhesive), skin care products (facial bleaches, face fresheners, face pack, face wash, face scrub, moisturizer cream and lotion, body wash, hair removing cream), home care products (mosquito repellent, air freshener, liquid soap, wet wipes), and food (package juice).
Manufacturing overhead (MOH) is the sum of all indirect costs associated with the manufacturing of a product. Allocation can be done using different methods, each of which takes into account different variables. In particular, the traditional method can be used based on the number of units of outputs, the direct labour hours, or the production machine hours. Activity based costing uses the activities that result in the costs increase such as machine setups or purchase orders. The third method allocates all of the services departments to the operating department. In order to calculate overhead costs it is necessary to identify overhead costs, estimate the overhead costs for a specific time period, choose a cost driver to use, estimate the figure for the cost driver and calculate the predetermined overhead rate.
Different formats of income statements allow measuring companies’ work in progress and inventory. Absorption costing includes all the costs associated with the manufacturing of a product. Variable costing includes the variable costs directly incurred in production and none of the fixed costs. Absorption costing accounts for any variable costs directly associated with manufacturing the product, including cost of raw materials, hourly cost of labor, salaries, costs of electricity. This method also includes any direct fixed costs such as payments for manufacturing buildings, insurance for manufacturing property, depreciation on manufacturing machinery. Using the absorption method increases costs of goods sold (COGS) and decreases gross profit per unit produced. Under the variable costing method all of the variable direct costs are included in COGS. Fixed direct costs are included into the operating expenses section. This method can result in higher gross profit, which reduces the price for units. Dabur India Limited uses an absorption format of income statement which results in slightly higher price for the unit produced.
Cost-Volume-Profit (CVP) looks to determine the breakeven point for different sales volumes and cost structures. The formula for the Breakeven Sales Volume is (FC)/(CM), where FC – Fixed Costs, CM – Contribution Margin = Sales – Variable Costs. Contribution margin is the incremental money generated for each product/unit sold after deducting the variable portion of the firm’s costs This type of analysis is used to determine whether the manufacturing of the product is economically justified or not.
Financial planning models for business employ user-supplied assumptions about certain future business events as inputs and perform calculations on these inputs to generate a set of integrated pro forma financial statements (balance sheet, income statement, cash flow statement) that describe the expected financial operations and performance of the business being modelled. The inputs to the financial planning models and the spreadsheet formulas can be changed if one wishes to evaluate the impact of different assumptions on the pro forma financial statement output. Performance measurement if the process used to access the efficiency of projects, programs, and initiatives. It is a systematic approach collecting, analyzing, and evaluating how on track a project or a program is to achieve its desired outcomes, goals and objectives.
Process costing flow helps companies to track the flow of costs from department to department, rather than tracking costs for each individual item. Each department adds direct labor and manufacturing overheads costs, plus the cost of any raw materials it uses. Process costing is used when there is a mass production of similar products.
Sustainable Development Goals (SDGs) are aimed to end poverty. protect the planet, and ensure that by 2030 all people enjoy peace and prosperity. Dubar uses six practices which align with SDGs. Climate change strategy include management of water emissions, waste management, energy management, raw materials sourcing oversight, and biodiversity strategies. Company also controls compound gases emissions, which aligns with the goal of affordable and green energy. The company also provides sustainability and corporate responsibility reporting where it highlights all environmental and social efforts and contributions.
Kaizen costing is a system of cost reduction via continuous improvement. Under this structure various factors of production are considered, including costs of supply chain, legal costs, manufacturing costs, waste expenses, recruitment costs, marketing, sales, and distribution, and product disposal. In order to achieve cost reduction, variables as well as fixed costs are considered. Kaizen cost is achieved mainly by reduction in the variable costs, direct material and direct labor costs. In non-manufacturing departments, reduction is achieved through fixed cost items.
Lean manufacturing is a methodology that focuses on minimizing waste within manufacturing systems while simultaneously maximizing productivity. Benefits of lean manufacturing include reduced operating costs and improved product quality. Kaizen costing or continuous improvement is one of the aspects of lean manufacturing. This strategy is based on five key principles, including identifying value from the customer’s perspective, mapping the value stream, creating flow, establishing a pull system, and pursuing perfection with continual process improvement, or Kaizen. Thus, Dabur uses lean manufacturing in the form of KPI in order to monitor the manufacturing process and identify the areas for its improvement.
Work Cited
Dabur, Web.
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