XYZ Transport is running a bus between town A and town B which are 25 kms apart. The bus will make 4 round trips every day carrying on an average 30…

CA Intermediate · Cost and Management Accounting · PYQS · January 2025
XYZ Transport is running a bus between town A and town B which are 25 kms apart. The bus will make 4 round trips every day carrying on an average 30 passengers on each trip. The bus costs the company a sum of 5,00,000. It has been insured at 2% per annum and the annual tax will amount to 2,000 and the garage rent is 500 per month. Annual repairs will be - 8,000 and the bus is likely to last for 5 years. The driver's salary will be - 15,000 per month and the conductor's salary will be - 12,000 per month in addition to 10% of the takings as commission (to be shared by the driver and conductor equally). Cost of stationery will be 800 per month. Manager-cum-accountant's salary is 35,000 per month. Petrol and Oil will be - 1,000 per 100 km. Assuming 15% profit on takings. Depreciation will be charged at straight line method. You are required to calculate the bus fare to be charged for per passenger kilometer. The bus will run on an average 25 days in a month. (8 Marks)

Suggested Answer and Working Notes:

Statement of Cost per Passenger – Km Particulars Cost per annum (₹) Per month (₹) Standing Charges (A): Taxes 2,000 Insurance (5,00,000 × 0.02) 10,000 Garage Rent (500 × 12) 6,000 Salary of Driver (15,000× 12) 1,80,000 Salary of Conductor (12,000× 12) 1,44,000 Stationery (800 × 12) 9,600 Salary of Manager cum Accountant (35,000 × 12) 4,20,000 Total 7,71,600 Monthly Standing Charges: (7,71,600/12) 64,300.00 Running Charges (B): Depreciation [(5,00,000/5)/12] 8,333.33 Diesel and oil [(4 × 2 × 25 × 25) × 10] 50,000.00 Monthly Running Charges 58,333.33 Maintenance Charges (C): Repairs 8,000 666.67 Total cost before commission 1,23,300.00 Commission: (D) 16,440.00 Total cost (A+B+C+D) 1,39,740.00 Profit 24,660.00 Total takings (Total Cost + Profit) 1,64,400.00 Total passenger-km = 4 × 2 × 25 × 25 × 30 = 1,50,000 passenger km Hence, Fare per passenger-km = 1,64,400.00/ 1,50,000 = 1.09 Working Note: Calculation of Commission and Profit: Let total takings = x Commission = 0.10 x Profit = 0.15 x Takings = Cost before commission and profit + Commission + Profit Therefore, x = 1,23,300 + 0.10 x + 0.15 x 0.75x = 1,23,300 X = 1,64,400 Commission = 0.10 × ₹ 1,64,400 = 16,440 Profit = 0.15 × ₹ 1,64,400 = 24,660

Topics: Service Costing

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