Analyzing and Controlling Distribution Costs: A Comprehensive Report

This report provides a comprehensive analysis of distribution costs, exploring various methods such as cost-benefit analysis, activity-based costing, and resource consumption accounting. It highlights the critical role of the controller in managing and evaluating these costs, emphasizing the importance of monitoring shipping, storage, and administrative expenses to enhance trade profitability. The report details the steps a controller can take to address excessive distribution costs, including planning, control, and the establishment of cost control standards. It also explains the significance of setting standards for safety, quality, and operational practices within distribution. Furthermore, the report outlines the key information a company should record and maintain, such as variations in product costs and operational expenses, to effectively reduce distribution costs and improve overall financial performance. The report also references key academic sources such as Drury (2013) and Rushton, Croucher & Baker (2014) to support the analysis and recommendations.

Running head: ACCOUNT CONTROLLERSHIP
Account Controllership
Name of the University:
Name of the Student:
Authors Note:

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Table of Contents
Question 1.....................................................................................................................................2
Question 2.....................................................................................................................................2
Question 3.....................................................................................................................................2
Question 4.....................................................................................................................................3
Question 5.....................................................................................................................................3
Question 6.....................................................................................................................................4
References2...................................................................................................................................5

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Question 1
Different methods that can be used to analyze distribution costs includes cost-benefit
analysis, activity based costing and resource consumption accounting method. The managerial
accountants have increased responsibility to evaluate these costs and report the same to upper
management (Drury, 2013). Distribution systems can get highly arduous that focuses on
reviewing the costs that can be experienced throughout the year even if cost accounting attains
cost data on a frequent basis.
Question 2
It is vital for the controller to keep a track of distribution costs for the reason that it helps
in analyzing the structure and composition of shipping expenditures, storage, finishing work
along with goods sale and administrative costs. Moreover, it can also be said that if a controller
ensures decreased distribution costs then it can serve as a source for increased trade profitability
along with supply and marketing (Rushton, Croucher & Baker, 2014). Economic accountability
development and utilization of new system of economic incentives contributes highly in
decreasing distribution costs and maintaining trade profitability.
Question 3
Certain steps might be taken by a controller in case distribution cost of any product exceeds
actual price that was charged from the consumer. Such steps include:
 Planning and control- The controller will try to manage the actions of people those are
involved in incurring costs and gathering revenues.

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 Preparing control reports- The controller can prepare control reports those are quite
informational that directs the accounting department in detecting actual price variations
(Drury, 2013).
 Maintaining cost control standards- Maintaining standards can facilitate the controller
in making sure that proper quantity and quality of products are demanded and priced
effectively.
Question 4
The meaning of “standards” in context of distribution costs can be understood as certain
applicable rules and procedures in the preparation of cost statements. Moreover, such standards
are deemed to be followed in properly defining the cost incurred for delivering the product from
the manufacturing unit to the final consumers. For instance, International Financial Reporting
Standards are highly followed in managing the selling and distribution expenses (Rushton,
Croucher & Baker, 2014). Through use of such standards distribution costs can be easily
controlled.
Question 5
It is said that prices and contracts are not only the vital and strategic choice variable
within the standard setting. Moreover, setting distribution standards is highly important in order
to ensure standards for safety and quality. Such standards are important to be followed as this
helps in ensuring that while maintaining distribution costs operational methods and personal
practices are followed (Drury, 2013). Moreover, such standards are deemed to be followed in
properly defining the cost incurred for delivering the product from the manufacturing unit to the
final consumers.

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Question 6
Once a company has decides to maintain standards, they can prefer recording and
maintaining several information. Information regarding variation in the actual costs of the
product, operational costs and certain other information regarding organizational processes
associated with after sales services are to be monitored (Rushton, Croucher & Baker, 2014). This
information can be extremely helpful in decreasing the distribution costs through lowering
freight costs.

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References2
Drury, C. M. (2013). Management and cost accounting. Springer.
Rushton, A., Croucher, P., & Baker, P. (2014). The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.