Meaning and Measurement of Transportation Costs

There is a divergence between costing methodology and spending behaviour in transportation. This article identifies differences between economic and accounting cost concepts, and differences between the conceptual interpretations of cost estimates based on those concepts. In particular, the cost‐volume‐profit (breakeven) model is re‐examined in terms of its experimental and ex post estimates, and the reliability of those estimates, to describe and to guide managerial behaviour. Some criticism of statistical costing is warranted by the inherent difficulty of modelling human behaviour patterns. Likewise, enlightened interpretation of statistical cost estimates allows management to enhance the planning and control processes for which the figures were prepared.