Calculating Variable Cost per Pallet in Logistics

How to calculate the variable cost per pallet in logistics?

What are the factors that need to be considered when determining the variable cost per pallet?

Calculating Variable Cost per Pallet in Logistics

Variable cost per pallet is calculated by including costs that change with the number of pallets, such as pallet charges and storage fees. Let's break down the factors that need to be considered:

1. Pallet Charge In and Out: The cost of handling each pallet when it enters and leaves the facility is a variable cost that should be included in the calculation. These charges can vary depending on the logistics provider and the volume of pallets.

2. Per Pallet Storage Charge: If there is a monthly storage fee charged for each pallet stored in the warehouse, this cost should also be considered as a variable cost per pallet. The storage charge can fluctuate based on the duration of storage and the number of pallets stored.

3. Freight Charge per Truck: The cost of transporting pallets from the warehouse to the plant is another variable cost that should be factored into the calculation. This charge is typically based on distance and quantity of pallets shipped.

By taking into account these factors and excluding fixed costs such as lease expenses, a more accurate variable cost per pallet can be determined for logistics operations.