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CMA Foundation · Fundamentals of Financial and Cost Accounting · Cost, Cost Centre, Cost Unit and Cost Drivers

A Chennai transport company uses the composite unit 'tonne-kilometre' for its goods fleet. A truck carries 8 tonnes over 150 km and returns empty. Counting only the loaded trip, how many tonne-kilometres are generated?

The loaded trip generates 1,200 tonne-kilometres, found by multiplying 8 tonnes by 150 km. The empty return leg carries no load, so it adds nothing to the tonne-kilometres. A composite unit multiplies two measures rather than adding them.

  1. A158
  2. B1,200Correct
  3. C2,400
  4. D18.75

Explanation

Absolute tonne-km = tonnes x distance = 8 x 150 = 1,200. Doubling to 2,400 wrongly counts the empty return trip as loaded. Adding 8 and 150 gives 158, which confuses the composite unit with a sum.

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