Can Anyone help me in understanding WN-4 of the question given below:
Illustration 17
You have been given a permit to run a bus on a route 20 Km. long. The bus costs you
`90,000. It has to be insured @ 3% p.a. and the annual tax will be `1,000. Garage rent is
`100 p.m. Annual repairs will be `1,000 and the bus is likely to last for 5 years at the end of
which the scrap value is likely to be `6,000.
The driver’s salary will be `150 p.m. and the conductor’s `100 together with 10% of the
takings as commission (to be shared equally by both). Stationery will cost `50 p.m. The
manager-cum-accountant’s salary will be `350 p.m.
Diesel and oil be `25 per hundred kilometres. The bus will make 3 round trips for carrying on the
average 40 passengers on each trip. Assuming 15% profit on takings, calculate the bus fare to be
charged from each passenger. The bus will work on the average 25 days in a month.
Solution
Operating Cost Statement
Bus No. : Per annum Per 100
Carrying capacity : 40passenger km.
`P. `P.
1 2 3
A. Standing Charges
Depreciation (90,000 – 6,000) ÷ 5 16,800
Method of Costing (I) 6.35
Tax 1,000
Insurance 2,700
Stationery 600
Manager’s salary 4,200_____
Total 25,3001.756
B. Maintenance charges
Garage rent 1,200
Repairs 1,000_____
Total 2,2000.152
C. Operating or running charges
Diesel and oil 9,000
Driver’s salary 1,800
Conductor’s salary 1,200_____
Total 12,000 0.833
Grand Total (A+B+C) 2.741
Loading @ 25/75 0.91
Fare per passenger-km. 3.65
Notes :
(1) Number of kms. run in a month : 3 × 2 × 20 × 25 = 3,000
(2) Diesel & Oil : 3,000 ×
100
25
= `750
(3) Number of passenger-kms. per month : 3,000 × 40 = 1,20,000
per annum : 1,20,000 × 12 = 14,40,000
(4) Loading- If taking is `100, 10 will have to be given ascommission and 15 must remain
as profit; the cost must therefore be 75. On 75 the loading must be 25 to make the taking
equal to 100.
CAclubindia
