CLTD Logistics Costing and Finance 1 — Questions and Answers
Question 1: Which costing method allocates logistics costs based on the actual activities that consume resources rather than spreading them proportionally across all products?
- Standard costing
- Activity-based costing (ABC) (Correct answer)
- Marginal costing
- Absorption costing
Correct answer: Activity-based costing (ABC)
Activity-based costing (ABC) traces costs to specific activities (e.g., picking, loading, invoicing) and then to cost objects, giving a more accurate picture of true logistics expenses.
Question 2: A logistics manager calculates that total fixed costs are $500,000, variable cost per unit is $10, and selling price per unit is $20. What is the break-even volume?
- 25,000 units
- 50,000 units (Correct answer)
- 100,000 units
- 10,000 units
Correct answer: 50,000 units
Break-even volume = Fixed costs ÷ (Price – Variable cost) = $500,000 ÷ ($20 – $10) = 50,000 units.
Question 3: Which of the following best describes a carrier's 'fuel surcharge'?
- A flat fee added to every shipment regardless of weight
- A variable accessorial charge that adjusts freight rates based on diesel fuel price indices (Correct answer)
- A penalty charged when cargo is not ready at pickup
- A discount applied when shipments exceed a minimum volume
Correct answer: A variable accessorial charge that adjusts freight rates based on diesel fuel price indices
Fuel surcharges are accessorial charges that fluctuate with published fuel price indices (e.g., DOE diesel index), allowing carriers to recover fuel cost volatility.
Question 4: Total landed cost includes which of the following elements?
- Purchase price only
- Purchase price plus freight and insurance only
- Purchase price, freight, insurance, duties, taxes, and other import/export costs (Correct answer)
- Freight and warehousing costs only
Correct answer: Purchase price, freight, insurance, duties, taxes, and other import/export costs
Total landed cost captures all costs to bring a product to its destination, including purchase price, ocean/air freight, insurance, customs duties, taxes, and handling fees.
Question 5: What is the primary purpose of a transportation management system (TMS) in logistics finance?
- To eliminate the need for freight audits
- To optimize carrier selection and freight spend while providing visibility into transportation costs (Correct answer)
- To replace manual warehouse labor
- To set carrier contract rates automatically
Correct answer: To optimize carrier selection and freight spend while providing visibility into transportation costs
A TMS optimizes load planning and carrier selection to minimize freight spend and provides cost reporting and analytics, directly supporting logistics financial management.
Question 6: A 'cost-to-serve' analysis is primarily used to:
- Calculate the warehouse lease rate
- Determine the profitability of serving individual customers or channels by allocating all supply chain costs (Correct answer)
- Benchmark carrier performance against industry rates
- Forecast seasonal demand fluctuations
Correct answer: Determine the profitability of serving individual customers or channels by allocating all supply chain costs
Cost-to-serve analysis attributes all supply chain costs (transport, warehousing, order processing, returns) to specific customers or channels to reveal true profitability.
Question 7: In logistics, which term describes the practice of billing customers for freight charges after verifying the carrier's invoice for accuracy?
- Freight consolidation
- Freight audit and payment (Correct answer)
- Reverse billing
- Carrier rate negotiation
Correct answer: Freight audit and payment
Freight audit and payment is the process of reviewing carrier invoices for errors, ensuring rates and charges match contracts, then authorizing payment—a key logistics cost control function.
CLTD Logistics Costing and Finance 1
Which costing method allocates logistics costs based on the actual activities that consume resources rather than spreading them proportionally across all products?