The Cost Information System requires that your expenses be categorized into the following main activities:

A beneficial unit cost improvement project to undertake is an analysis of your company's expense accounts to insure that overhead is categorized by the appropriate activity.

It is important to categorize expenses to the appropriate overhead activity because each is allocated to shipments in a different manner.  Terminal overhead is carried by only the terminal activities, and is not allocated to Linehaul.  Maintenance  overhead is allocated only to the direct vehicle-related expenses.  Only General and Administrative overhead is carried by all cost activities.

Expenses for the direct costs Billing & Collecting and Cargo Loss & Damage often are hidden among overhead expenses, so the first thing to look for are those direct expenses.  Remaining overhead, which are any expenses not attributable to direct transportation activities, should still be categorized as Terminal, Maintenance, or General and Administrative (which is all other, including Sales and Safety).

Terminal overhead is for expenses attributable to the operation of the freight terminal, not already assigned to a direct cost activity.  This includes salaries, wages and fringes for management and other support staff, depreciation and rent for terminal facilities, and operating supplies.  It should not include expenses for Sales, Safety or any Head Office activities which happen to be located at a freight terminal.

Maintenance overhead is for any shop and garage expenses not charged out to Direct Activities, such as building depreciation and tow truck maintenance.  Some carriers charge out all maintenance to the Direct Activities.

General and Administrative overhead includes the categories:

• Traffic & Sales, for the promotion and solicitation of Traffic
• Insurance & Safety, for non-direct expenses for administrating insurance and safety programs
• General & Administrative, for all overall administrative functions

The unit cost development report "General Ledger Mapping" provides a breakdown of the dollars and expense accounts, and is a good starting point for the review.

Updated February, 2005

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