Prostokvashino, that is, the Russian brand under the H&N umbrella (also a Russian company that took its full ownership only in 2024).
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The Author of ASAP Business English Hunger Telegram channel:: Freylina Valeriia Latifa Frolova.
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Products Made
Prostokvashino produces a variety of dairy products: yogurts, tvorog, creams, etc. Their products resonate with the Russian audience as their marketing involves a cat in stripes who advocates for grandmother-made products, tapping into the heart’s desire to have a Russian vibe and what better serves that than a grandmother (babyska) catering this image.
Their products are not high-end but that is not the main objective. The objective is to make the audience realise feel-good chemicals when seeing a grandmother offering her own products.
Costing Method
I think the brand Prostokvashino uses a process costing accounting method as it allows them to balance and fine-tune highly identical units production assessments, averaging costs across the departments.
Process costing is well suited for manufacturing dairy products since they are not customized or unique per se and do not require a sophisticated job order costing to track standardized, mass-produced products.
Each stage from raw material reception, processing to packaging and delivering in grocery stores like Perekrestok, is under a rigid control, typically accumulating costs per production stage.
Accurate allocation of raw materials, direct labor, and manufacturing overhead, is not worth nothing to manoeuvre the production process efficiently.
The rationale behind the process costing, that is, accumulating costs per process or department and averaging the costs or evenly spreading them out across the products.
Tracking progenitors products is not wise as they incur the same costs each time; therefore, it is natural to collect all costs and divide by the overall output.
Why I Think That Prostokvashino Uses Process Costing
The mechanics of dairy mass production involve milk reception, processing — pasteurisation, fermentation, cheese production — packaging, and storage. Prostokvashino’s output is highly standardized as millions of milk bottles, cheese batches, and yoghurt containers are made each day.
Formulations for production, fat content, and packaging formats are set, indicating a continuous supply of products that mirror the process costing method.
It is surreal to track each individual milk bottle or a cheese batch as daily production volumes reach stratospheric levels. Parking costs across multiple production stages save the day as costs are accumulated based on each stage: milk pasteurisation, fermenting, and bottling, banking on each separate cost of labor, raw materials, and overhead.
For example, the milk bottle is produced in one day. The milk bottle required raw materials — raw milk, direct labor — an operator overseeing the pasteurisation, and overhead — paying for cleaners and utilities (electricity to power the machinery). Instead of tracking each cost of these three pillars, the company assigns costs to each process and divides them by bottles produced in a day.
Why you should care
The bottom line is that opting for the right accounting method is a natural step, given the work specification. In this dairy case, the process costing is being carried out by assigning a cost to the process or department, instead of tracking each cost to each job like in a job order costing.
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