The elements of warehousing cost normally accounted for are transportation, storage and administration. The inventory carrying cost is not included in warehousing cost. The warehousing cost includes fixed and variable cost elements. The fixed cost covers, rental, capital cost, salary wages of the employees, and utilities while the variable cost covers repair and maintenance, material handling, transportation, and packaging which is related to the load on the warehouse etc. Wide variations are observed in proportion of variable and fixed cost across the different warehouse. In general the ratio of fixed cost varies from 25 to 45 per cent of the total cost of the warehousing operation. The higher fixed cost is observed in case of a newly constructed warehouse through bank loans.
Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.
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