Transportation costs are all expenses related to the transportation of raw materials, finished products, and employees. It's the money that's needed to ensure that all moving parts get where they need to be so that your customers receive your product or service on time. The term transportation expenses refers to the specific costs incurred by an employee or a self-employed taxpayer traveling for business reasons. Transportation expenses are a subset of travel expenses, which include all expenses related to business trips, such as taxi fare, fuel, parking fees, lodging, meals, tips, cleaning, shipping, and telephone that employees can incur and request reimbursement from their employers.
Some transportation expenses may be eligible for a tax deduction on the employee's tax return. Transportation costs, which are also known as freight costs, are part of the cost of the goods purchased. The reason is that accountants define cost as all the costs necessary to have an asset in place and ready for use. Transportation costs determine the total cost borne by the logistics operator to transport goods from one place to another.
This cost includes operating costs, maintenance charges, and fixed costs. Determining the cost of transportation accurately will allow you to calculate the exact monthly profit margin.