Integrating Logistics Cost Calculation into Production Costing

Production costing is a well developed area of cost management. There are several applications reported which make use of the up-to-date costing methods like activity-based costing. Nevertheless, research in product cost calculation has paid limited attention to logistics costing so far. This paper aims to investigate how logistics cost calculation can be integrated into production costing. The methodology applied relies on the multi-level indirect cost allocation technique as it corresponds to the nature of logistics costs appearing in production systems. The proposed costing model is tested by a numerical example. Based on the research results, it can be concluded that the integration of logistics functions into production costing yields clear advantages; however, its implementation may require considerable efforts and also some compromises concerning the methodological constraints.