Roshan Travels provide bus facility to a College for carrying its students from home to College and dropping them back at home after study hours.…

CA Intermediate · Cost and Management Accounting · RTP · January 2025
Roshan Travels provide bus facility to a College for carrying its students from home to College and dropping them back at home after study hours. The travel company runs a fleet of 6 buses for this purpose and park them in the college premises. The information regarding bus running is as follows: (I) The College operates in two shifts (one in the morning and one in the afternoon). (II) The distance travelled by each bus one way is 20 kms. (III) The students need to attend the college for 30 days in a month. (IV) The seating capacity of each bus is 30 persons. (V) The seating capacity is normally 80% occupied during the year. The information regarding expenses incurred for a year is as follows: Particulars Amount Driver and attendant salary 60,000 per bus per month Cleaner's salary (One cleaner for 2 buses) 30,000 per cleaner per month Diesel (Avg. 8 kms per litre) 160 per litre Insurance charges (per annum) 2% of Purchase Price License fees and taxes 10,160 per bus per month Parking charges paid 36,000 per month Repair & maintenance including engine oil and lubricants (for every 5,760 kms) 5,712 per bus Purchase Price of each bus:30,00,000 Residual life of each bus: 8 Years Scrap value per bus at the end of residual life:6,00,000 Students coming from a distance of beyond 10 kms away from the College are charged double the fare than that from students coming from a distance of up-to 10 kms. away from the College. 50% of students travelling in each trip are coming from a distance beyond 10 kms. from the College. The charges are to be based on average cost. You are required to: (i) PREPARE a statement showing expenses of operating a single bus for a year. (ii) CALCULATE the average cost per student per month in respect of: (a) Students coming from a distance up-to 10 kms. from the College. (b) Students coming from a distance beyond 10 kms. from the College.

Suggested Answer and Working Notes:

(i) Statement of Expenses of operating a single bus for a year Particulars Rate (₹) Per Bus per annum (₹) (A) Standing Charges: Driver and attendant salary 60,000 p.m 7,20,000 Average Cleaner's salary (50%) 30,000 p.m 1,80,000 Insurance charge 60,000 p.a. 60,000 License fee, taxes etc. 10,160 p.m. 121,920 Average Parking Charges 36,000 p.m 72,000 Depreciation {(30,00,000 - 6,00,000) ÷ 8} 3,00,000 p.a. 3,00,000 (B) Maintenance Charges: Repairs & maintenance including engine oil and lubricants (Working Note 1) 5,7120 p.a. 5,7120 (C) Operating Charges: Diesel (Working Note 2) 11,52,000 Total Cost (A + B + C) 26,63,040 Cost per month 2,21,920 (ii) Average cost per students per month: A. Student coming from distance of up-to 10 km = Total cost per month / Total no. of equivalent student = 2,21,920 / 72* = 3,082.22 B. Student coming from a distance beyond 10 km = 3,082.22 × 2 = 6,164.44 * Considering half fare students as a base Full fare students (12 × 2): 24 students Add: Half fare students (Working Note 3): 12 students Total Equivalent number of students per month: 36 students Total Equivalent number of students per month (morning + afternoon shift): 72 students Working Notes: 1. Calculation of Repairs and maintenance cost of a bus: Distance travelled in a year: (4 trips x 2 x 20 km. × 30 days × 12 months) Distance travelled p.a.: 57,600 km. Repairs and maintenance cost per Bus per annum: = (57,600 km. / 5,760 km) × ₹ 5,712 per bus = 57,120 per annum 2. Calculation of diesel cost per bus per annum: Distance travelled in a year = 57,600 km Diesel cost per Bus per annum: = (57,600 km. / 8 Km) × ₹ 160 = 11,52,000 3. Calculation of equivalent number of students per bus: Seating capacity of a bus: 30 students Occupancy (80% of capacity): 24 students Half fare students (50% of 24 students): 12 students Full fare students (50% of 24 students): 12 students

Topics: Service Costing

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