Clorox is the global leader in the production of bleach. Clorox also makes laundry and cleaning items (Formula 409, Pine-Sol, Tilex), cat litter (Fresh Step), car-care products (Armor All, STP), the Brita water-filtration system (in North America), and charcoal briquettes (Kingsford).

Its First Brands buy gave Clorox Glad-brand plastic wraps, storage bags, and containers.

Process Cost Evaluation – Clorox’s approach to cost management is grounded on an in-depth understanding of its key processes and the resources consumed by these processes.

Clorox conducts an exhaustive analysis to map its 25 key processes and, based on historical activity-based costing information, it assesses a gold-standard cost for each process. The company continuously evaluates the resources consumed by each process against this gold standard to uncover potential inefficiencies.

The company’s process orientation is based on the belief that a total-value-chain view rather than a

(traditional/redundant) isolated-activity view is key to understanding inefficiencies. The company tries to understand the interrelationships between each step in a process and between processes to identify unnecessary redundancy and complexity.

Questions

1 What are the aspects of the bleach manufacturing industry that make process costing useful?
2 Why is process costing particularly suitable for this company?