The special calculation for logistics

In logistics, conventional cost-performance accounting based on overhead calculation reaches its limits. As a result of various difficulties, it is hardly possible to obtain a suitable allocation of the costs. Another approach is to switch to process-based cost accounting, which offers an improved presentation of the costs of indirect service areas such as marketing or logistics. In this way, it is possible to achieve a more usage-based distribution of these overhead costs.

Logistics-focused cost accounting

Process-based cost accounting is suggested as a way to refine logistics-based cost-performance accounting in order to overcome the problems faced by traditional cost-performance accounting in the tracking of logistics costs and performance. These problems include:

The adequate presentation of the logistics area - e.g., the question of whether waiting time at the ramp is a part of the transport time.
The precise allocation of cost units - e.g., the question of determining to which contract overhead costs at the warehouse should be allocated and to what extent.
The lack of a closed cost theory for the logistics area, among other things, because of the high complexity of cost functions - e.g., transport costs are determined not only by the size of shipment and distance, but also by type of roads and driving styles.

A central problem of traditional overhead calculation is that logistics overhead costs cannot be allocated in accordance with the cause of the cost as overhead surcharges for material, production or sales on products.
The idea behind process-based cost accounting is to precisely record the costs generated during processes. To fulfill this purpose, the following steps are conducted [1].

Steps in process-based cost accounting

Identification of the actual causes of the output and cost volume, the so-called process factors, reference values and cost drivers. Traditional cost accounting generally concentrates on unit quantities and unit prices. But process-based cost accounting also includes, in addition to employment, the array of variations, complexity of the products and production, and the size of the contract as cost factors.
Once the process factors are set, the process quantities can be determined by counting the number of material orders, material deliveries, etc.
Process cost-unit rates can be determined by dividing the costs allocated to a process by the related process quantities.
Identified, functionally related subprocesses are added to main processes in a manner that extends across cost centers.

Despite its many strengths, process-based cost accounting is not used extensively among companies because of the effort required to implement it [1].

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