The costs of getting the manufactured products to the customer have become relatively more significant in recent years, as the cost of manufacturing products generally has declined. In fact, for some companies, the total costs of distribution of the products are in excess of the production or procurement costs.
Although in most companies more effort has been directed toward analysis and control of production costs, the costs of distribution have either not been available in usable form or not been communicated to marketing management for decision making. Executives responsible for distribution of the products must be made aware of the cost components to effectively plan and carry out a proper distribution system effort. The controller must develop the control mechanisms, secure the facts and interpret them, and communicate the information to the marketing executives. To be effective, the marketing executive must understand the accounting control information and use it to develop better marketing plans. The increasing costs of distribution can be controlled and even reduced if the controller works with the sales and marketing management to develop the necessary control techniques.
Any controller who tackles distribution cost control will find that the problems usually are much more complex than those relating to production costs. First, psychological factors require more consideration. In selling, the attitudes of the buyer and the salesperson are ...