GLP Financial Management & Cost Control Flashcards

Which cost category in logistics refers to the expense of holding inventory over a period of time, including storage, insurance, and obsolescence?

Answer: Carrying cost

Carrying cost (also called holding cost) includes storage fees, insurance, spoilage, and the opportunity cost of capital tied up in inventory.

A logistics company has total fixed costs of $500,000 and a contribution margin per unit of $25. How many units must be sold to break even?

Answer: 20,000 units

Break-even units = Fixed Costs ÷ Contribution Margin per Unit = $500,000 ÷ $25 = 20,000 units.

What does the term 'landed cost' represent in global logistics financial planning?

Answer: Total cost including purchase price, freight, insurance, duties, and fees to deliver goods to destination

Landed cost is the complete cost of a shipment arriving at its destination, encompassing product price, transportation, insurance, customs duties, and all other fees.

Which financial metric measures the revenue generated per dollar of logistics cost incurred?

Answer: Cost-to-Serve Ratio

The Cost-to-Serve Ratio compares logistics costs to revenue, revealing how efficiently the supply chain converts expenditure into sales.

In logistics budgeting, which approach builds the budget from zero each period by justifying all expenses anew rather than using prior-year figures as a baseline?

Answer: Zero-based budgeting

Zero-based budgeting requires each department to justify every line item from scratch each cycle, preventing automatic carry-over of unnecessary costs.

A 3PL provider charges $2.50 per unit for fulfillment. If a shipper processes 80,000 units per month, what is the monthly fulfillment cost?

Answer: $200,000

$2.50 × 80,000 units = $200,000 monthly fulfillment cost.