Principles of logistics costing.

  1. A logistics costing system should mirror the material flow and identify the costs that result from providing customer service, and also it should be capable of enabling separate cost and revenue analysis to be made by customer type and by market segment or distribution channel (no to deal with averages).
  2. A mission cost approach can be implemented, in which a customer service goal is set within a specific product/market context, then cost associated with this mission are taken from a number of functional areas within the firm.
  3. Barret‘s mission costing method: 1) identify activity centres associated with a distribution mission, 2) identify and isolate the incremental costs (no sunk costs) incurred as a result of undertaking that mission. This approach becomes particularly powerful when combined with a customer revenue analysis, because even the customers with low sales off-take may still be profitable in incremental costs terms if not on an average cost analysis.
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