Activity-based costing (ABC) is a method that assigns costs to products and services based on the

resources they consume. Here's why ABC directly reflects logistics performance:

Cost Allocation: ABC assigns costs to specific logistics activities (e.g., warehousing, transportation,

order processing) rather than spreading costs evenly across all products.

Performance Measurement: By linking costs to specific activities, ABC provides insights into the

efficiency and performance of each logistics function.

Cost Drivers: Identifying cost drivers helps in understanding the factors that influence logistics costs,

enabling better decision-making and process improvements.

Detailed Analysis: ABC allows for a more granular analysis of logistics costs, highlighting areas where

performance can be improved to reduce costs.

Reference:

Cooper, R., & Kaplan,

R. S. (1991). The Design of Cost Management Systems. Prentice Hall.

Drury, C. (2013). Management and Cost Accounting. Cengage Learning.