In logistics the most prime factor behind the cost is supply chain management. That is we can say if a company doesn’t follow its supply chain network in a proper manner, it may have to take huge burden of cost whilst moving or transferring the goods and services from one place to another. An analysis of costs involved in logistics must be taken into consideration for identifying which types of costs have higher impact on the logistics or supply chain.
- Direct costs and Indirect Cost
The term direct cost is a cost that directly hugged to a specific object. For instance, direct labor and transport cost direct material cost etc. Indirect cost are cost that not directly traced with a product for example, rent and insurance etc.
- Fixed and Variable Cost
The fixed cost does not change in accordance with the change in production or output. For example salaries, taxes cost of storage of materials etc. Sometimes indirect cost also be called as fixed cost. Variable costs vary with the production level or output. For instance commission to a sales staff is vary with the sales made by them; another example is transportation cost, because it depends on the requirements of the company.
- Tangible and Intangible cost
Tangible means it a have a physical sense. Tangible cost simply an authority has to pay for their employees for example, salaries paid to staff and expenses incurring in the nature of training etc. Intangible cost doesn’t have a physical existence. If the employees are not capable of being adjusted with the mannerism or the rules of the firm and the time taken to understand the company’s system there may have a lag of time for understanding it, this is an example of intangible cost.
A rigid identification of the above cost calculation is essential for understanding the cost of the concern and cost in each stage of manufacturing.
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Prepared by
Arjun A R
Faculty
