Skyline Travels Pvt. Ltd., a New Delhi-based cab rental company, offers transportation services to tourists across major destinations including…

CA Intermediate · Cost and Management Accounting · MTP · May 2026
Skyline Travels Pvt. Ltd., a New Delhi-based cab rental company, offers transportation services to tourists across major destinations including Delhi, Lucknow, and Ayodhya. With the objective of enhancing its customer base and attracting more tourists, the company has recently introduced an exclusive four-day tour package covering the route Delhi-Lucknow-Ayodhya-Delhi. This package is designed to provide a seamless and comfortable travel experience, combining convenience with cost-effectiveness. The management has compiled relevant operational and cost-related information pertaining to this package to evaluate its feasibility, pricing strategy, and profitability. Distance Delhi to Lucknow (Km.) 555 Distance between Lucknow to Ayodhya (Km.) 135 Distance between Ayodhya to Delhi (Km.) 690 Price of diesel in Delhi 89 per litre Price of diesel in Lucknow 92 per litre Price of diesel in Ayodhya 93 per litre Mileage of cab per litre of diesel (Km.) 18 Chauffeur's salary 18,000 per month Cost of the cab 14,50,000 Expected life of the cab 3,00,000 kms. Servicing cost - 45,000 after every 40,000 kilometres run. Chauffeur's meal allowance 120for every 200 kilometres of completed journey Other set up and office cost - 6,000 per month. Skyline Travels Pvt. Ltd. has entered tie-ups with fuel service centres at Delhi, Lucknow, and Ayodhya to facilitate diesel refilling for its cabs through a fuel passbook system. As per company policy, fuel is filled only to the extent required to reach the next destination. You are required to COMPUTE the package price (inclusive of GST @ 5%) to be quoted for the four-day Delhi-Lucknow-Ayodhya-Delhi tour, assuming that the company desires to earn a profit of 25% on its net takings (i.e., excluding GST). Take 30 days in a month.

Suggested Answer and Working Notes:

Calculation of Price of Delhi-Lucknow-Ayodhya-Delhi tour package Particulars Amount (₹) Amount (₹) Diesel Cost (Working Note-2) 6,999.00 Servicing Cost (₹ 45,000 ÷ 40,000 kms × 1380 kms.) 1,553.00 Chauffeur's meal cost (six 200 km. completed journey × ₹ 120) 720.00 Other Allocable costs: Depreciation (₹ 14,50,000 ÷ 3,00,000 kms × 1380 kms.) 6,670.00 Other set-up and office cost (₹ 6,000 ÷ 30 days × 4 days) 800.00 Chauffeur's salary (₹ 18,000 ÷ 30 days × 4 days) 2,400.00 9,870.00 Total Cost 19,142.00 Add: Profit (25% of net takings or 1/3 rd of total cost) 6,381.00 Net Takings 25,223.00 Add: GST @5% 1,276.15 Price of the package (inclusive of GST) 26,799.15 Working Notes (1) Total distance of journey From To Distance (in Km.) Delhi Lucknow 555 Lucknow Ayodhya 135 Ayodhya Delhi 690 Total Distance 1,380 (2) Cost of Diesel From To Distance (in Km.) Price of diesel per litre (₹) Total diesel Cost (₹) I II III IV V = (III ÷ 18 km) × IV Delhi Lucknow 555 89 2,744 Lucknow Ayodhya 135 92 690 Ayodhya Delhi 690 93 3,565 Total cost 6,999

Topics: Service Costing

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic