Business Process Analysis of the Value Chain

Management accounting

TABLE OF CONTENTS
Part 1: Business process............................................................................................................3
Analysis of the value chain of the product category..............................................................3
Part 2: Costing system................................................................................................................3
Activity based costing and the way it differs from traditional costing system......................3
Benefits and disadvantages of ABC for business entity........................................................3
Presentation of product costing system..................................................................................3
Part 3: Product costing..............................................................................................................3
Applicability of cost model to the business...........................................................................3
Estimation of full product cost...............................................................................................3
Assumptions and estimations.................................................................................................3
References..................................................................................................................................4

LIST OF TABLES
Table 1: Direct Costs under ABC Costing method....................................................................9
Table 2: Overhead or Indirect Costs under Activity Based Costing for Yocrunch (activity
units, activity pools, and cost drivers)......................................................................................10
Table 3: Overhead or Indirect Costs under Activity Based Costing for Actimel (activity units,
activity pools, and cost drivers)...............................................................................................11
Table 4: Allocation in ABC: Allocating activity pools to product’s units...............................11
Table 5: Finding Overhead Costs Per Unit in ABC.................................................................12
LIST OF FIGURES
Figure 1: Value chain analysis of Danone.................................................................................4

Informati
on from
customer
Creation
of a
forecast
Forecast
to Supply
Point
Supply
Point
plan
productio
n
Product
is
finished
and
shipped
out
Delivery
of orders
Figure 1: Value chain analysis of Danone
PART 1: BUSINESS PROCESS
Analysis of the value chain of the product category
The company considered is Danone. It is a world leading food company which focuses on
four product lines: Fresh Dairy Products, Waters, Early Life Nutrition, Medical Nutrition.
The value chain below shows how Danone ltd undergoes the processes of Information from
customers, creation of forecast, forecast to supply point, supply point plans production,
product is finished and shipped and lastly delivery of orders in its early life nutrition products
as the specific product category is early life nutrition. The Early life nutrition products use
these steps effectively to deliver the product to the customers and make profit out if it. Below
is a more detailed information of how the value chain works in Danone ltd.