You are required to DETERMINE a suggested fare per passenger-km from the following information for a Mini Bus: (i) Length of route: 30 km (ii)…

Working Notes: 1. Depreciation per annum: = (Purchase price - Scrap value) / Estimated life = (₹ 4,00,000 -10,000) / 5 years = 78,000 2. Total distance travelled by mini-bus in 25 days: = Length of the route (two -sides) × No. of trips per day × No. of days = 60 km × 6 trips × 25 days = 9,000 km 3. Total Passenger-Km: = Total distance travelled by mini-bus in 25 days × No. of seats = 9,000 km × 20 seats = 1,80,000 passenger-km Statement suggesting fare per passenger-km Cost per annum (₹) Cost per month (₹) Fixed expenses: Insurance 15,000 Garage rent 9,000 Road tax 3,000 Administrative charges 5,000 Depreciation 78,000 Interest on loan 10,000 1,20,000 10,000 Running expenses: Repair and maintenance 15,000 1,250 Replacement of tyre-tube 3,600 300 Diesel and oil cost (9,000 km × ₹ 5) - 45,000 Driver and conductor's salary - 5,000 Total cost (per month) 61,550.00 Add: Profit 20% of total revenue or 25% of total cost 15,387.50 Total revenue 76,937.50 Rate per passenger-km = 76,937.50 / 1,80,000 passenger km = 0.42743 i.e., = 0.43 i.e., 43 paise