Requirements for cost accounting systems in logistics, Features...

6.2. Requirements for cost accounting systems in logistics

The task of accounting for costs in logistics is to provide managers with information that allows them to make decisions in the field of managing costs to promote the material flow within the logistics system. However, costs can only be managed if they can be accurately measured. Therefore, the system of accounting for the costs of production and circulation of logistic process participants should:

o identify the costs that arise during the implementation of logistics functions;

o generate information about the most significant costs;

o generate information about the nature of the interaction of the most significant costs with each other.

If these requirements are met, it becomes possible to use an important criterion for constructing an optimal variant of the logistics system - a minimum of total costs throughout the entire logistics chain.

In logistics, the key event (the object of analysis) is the customer's order (customer, product or service) and actions to fulfill this order. Calculation of costs should allow to determine whether a particular order (customer, product or service) brings profit.

For effective costing, you need:

a) accurately determine the specific costs that should be included in the analysis scheme;

b) set a time frame for costs;

c) attribute costs to specific factors relevant to the evaluation of alternative actions;

d) establish a decision criterion.

Logistic processes penetrate the main divisions of the enterprise (purchase, production, marketing, etc.) horizontally. Traditional methods of accounting, aimed at determining costs by functional areas (vertically), do not allow to allocate costs arising during the implementation of the through process, to generate information on the most significant costs, as well as the nature of their interaction with each other. We only know what the implementation of a function does (Figure 30).

Fig. 30. Traditional cost accounting system for functions

the costs of accounting process gives a clear picture of how the generated costs related to customer service, what percentage of them in each of the divisions. Summarizing all the costs horizontally, you can determine the costs associated with a particular process (Figure 31). Thus, both are deterministic performance through material flow, as well as individual-specific costs arising in the various units.

6.3. Features of accounting logistics costs

Specificity of accounting costs in logistics is the grouping of costs not around the units of the enterprise, but around the work and operations that absorb resources. The transition from control by function to process control requires an appropriate transition from cost accounting to functions to cost accounting for processes.

Fig. 31. Accounting for logistics costs along the entire flow of material flow

Accounting for costs in logistics does not require the thoroughness that is required in accounting. The main task here is to identify the main costs and understand how they are interrelated with each other.

The system for assessing logistics costs is needed primarily for logistics managers, who take it as the basis for making a decision. No rules or laws require that process costs be accounted for in financial statements.

Differences in reporting for preparing a logistics solution from a financial report:

a) the report on logistics costs is more detailed and may contain information that is not usually disclosed to outside organizations;

b) the report on logistics costs is more extensive and can contain both past and future costs and profits; it also characterizes the potential effect of decisions not yet taken;

c) the structure and content of the report on logistics costs are more dependent on the specific requirements for logistics solutions and communications in a particular company than from instructions to financial reporting. A comparison of the report on logistics costs and financial reporting is given in Table. 8.

Table 8

Comparison of the logistic cost report with financial reporting

Comparable Features

Logistic Cost Report

Financial Report


Company Management

Third-party users: shareholders, financial institutions


Optimizing material flows

Control of administration, providing a reliable basis for taxation

Quality criteria

Process compliance, suitability for decision making in logistics

Suitability for audit, compliance with instructions

Main attention (time aspect)

Present and Future

Past and Present

Structure and content

Individual, tailored to each company and solution

Normalized by law and professional organizations

Evaluation of logistics costs by processes depends on subjective judgments and decisions. What are the costs to include in the analysis and how to allocate them - questions for which there are no unambiguous prescriptions. One general rule: specific costs should not be attributed to those logistical factors that are not controlled by the organization's managers.

Due to the subjective nature of the cost distribution process, the reports of companies in the same industry often have a wide spread of logistic costs. It is important to understand that such a spread does not always have a direct bearing on the actual differences in the efficiency of logistics operations.

6.4. Classification of costs in logistics

The costs in logistics are classified by different characteristics (Figure 32).

Figure 32. Classification of costs in logistics

Depending on the behavior of costs when changing the amount of work with the material flow, they are divided into constants and variables. Constant costs - do not change along with normal fluctuations in activity volumes. Variables costs - vary in proportion to the change in activity volume.

Depending on the attribution to these or other processes, direct and indirect costs are distinguished. Direct costs (or transaction costs) are costs that are directly related to the cost object (due to specific logistics activities). Such costs are not difficult to identify. Direct costs for transportation, warehousing, cargo handling and some other work on order fulfillment and inventory management can be distinguished from traditional account accounts.

Indirect costs (indirect) are not directly related to the cost object. For example, a cost object is a truck. Direct costs - the driver's salary, depreciation of this car, etc., indirect - the maintenance of the equipment reserve, the labor reserve, the costs of transport department managers, and the administrative costs of the entire company.

Depending on the susceptibility to managerial influence, costs are divided into regulated and unregulated ones. Adjustable costs - costs that can be managed at the responsibility center level

Unregulated costs are costs that can not be influenced from the responsibility center. It is assumed that these costs are regulated at the company level as a whole.

Depending on the type of logistics function costs are divided into transport costs, storage costs, etc. In this case, the main costs that can be well managed at the level of responsibility of logistics services are costs associated with the storage and transportation of products. These types of costs are dealt with in the following two paragraphs.

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