In my prior article in this series, I mentioned an existing problem and that was the lack of volatility in the market. Today, I got what I wanted.
Transportation as used in business is a term reflecting costs tied to tractors, trailers, trucks, autos, and other forms of transportation items (aircraft, marine, and rail cars). Depending on the nature of the particular industry, transportation costs may be assigned to cost of sales or in the overhead section of the income statement.
Some small businesses manage transportation costs in incremental payments by utilizing mileage reimbursement. It is a very advantageous system if used correctly. Other small businesses augment their existing vehicle fleet by paying employees via mileage reimbursement for the use of the employee’s automobile.
In any industry, especially transportation, it is essential for the owner of a business to understand how much it costs per mile to operate his vehicle, trucks or fleet. The formula looks simple and in reality it is; but you must understand the underlying elements to truly appreciate and comprehend the calculation.