Logistics Management

CHAPTER 9

Using Activity-Based Costing in Logistics Decision Support

Introduction

Activity-based costing (ABC) has helped many companies for decades gain a true understanding of their costs to produce and distribute products to customers. ABC provides a precise, accurate view of costs at very granular levels, namely, at the individual product, service, and customer level. As we will discuss, this differs from traditional accounting systems that are best suited to generate cost analyses at the overall firm, function, and facility level but that distort costs at more granular levels such as the individual product or customer level.22

ABC receives relatively little attention in the world of logistics today, where such forces as the rapid advance ...