Detailed cost modelling: a case study in warehouse logistics

Abstract

PurposeThe purpose of this paper is to examine the applicability of different drivers for assigning activity costs to products in warehouse logistics environment.Design/methodology/approachAn action research case study in the warehouse logistics of an electronics wholesaler. Data were collected from a single activity which was analysed in depth.FindingsThe study illustrates that there may be significant variation in activity costs that cannot be traced with any single transaction‐based driver. Automatic data collection methods can be used to support cost accounting in such a situation. It was clearly demonstrated that in certain environments it is possible to significantly increase the accuracy and versatility of accounting by measuring the actual durations together with other variables.Research limitations/implicationsThe results are derived from a single company and activity.Practical implicationsGives accountants in environments where data is rich and plentiful examples of methods for analysing the data for obtaining a deeper understanding of the cost behaviour of activities and products.Originality/valueComplements the discussion on activity cost drivers and logistics costing.

Sustainability Concept in Decision-Making: Carbon Tax Consideration for Joint Product Mix Decision

“…Pernot et al (2007) pointed out that TDABC can clearly demonstrate how long it takes to complete a certain activity, which can increase transparency, as compared to the conventional cost accounting system or ABC [13,30]. Varila et al (2007) argued that it is more suitable to use time drivers rather than activity drivers if the resource consumption and time are directly correlated. By case study, they found that complex activities cannot be measured by ABC's single activity driver; therefore, they proposed using bar codes, radio frequency identification (RFID) and other automatic data collection (ADC) methods in order to improve the disadvantages, including manual collection time, costs and the impossibility of immediate updating [31].…”

“…Varila et al (2007) argued that it is more suitable to use time drivers rather than activity drivers if the resource consumption and time are directly correlated. By case study, they found that complex activities cannot be measured by ABC's single activity driver; therefore, they proposed using bar codes, radio frequency identification (RFID) and other automatic data collection (ADC) methods in order to improve the disadvantages, including manual collection time, costs and the impossibility of immediate updating [31]. Kaplan and Norton (2008) mentioned that TDABC can predict the required production capacity according to future sales targets and is mainly used to determine required production capacity according to previous experience.…”

Application of the TDABC model in the logistics process using different capacity cost rates

“…Thus, among other advantages, TDABC permits to assess the added value that determines the existence of each activity, simulate the use of resources, etc. But also limitations were noted in some case studies in which, for example, there was the fact that it can be required a huge amount of data for estimating time equations (Bryon, Everaert, Lauwers & Van Meense, 2008;Varila, Seppänen & Suomala, 2007).…”

Rail infrastructure costing based on multi-level full cost allocation

“…It has been proved that ABC principles can be applied to distribution systems after an adequate adaptation [20]. The effectiveness of ABC can be increased through the automated collection of performance data in distribution systems [24]. Logistics costs in manufacturing companies can also be determined by using ABC [13].…”