CMA Intermediate · Cost Accounting · Operating Costing - Transport, Hotel and Healthcare
A goods carrier of Shree Logistics Ltd. travels 4,000 km in a month with a load of 5 tonnes on every trip and returns empty each time. Out of the 4,000 km, 2,000 km are loaded runs. What are the absolute tonne-km for the month?
Absolute tonne-km is 10,000, found by multiplying the 5-tonne load by the 2,000 loaded kilometres. The empty return kilometres carry no load and so contribute nothing to absolute tonne-km.
- A20,000 absolute tonne-km
- B10,000 absolute tonne-kmCorrect
- C5,000 absolute tonne-km
- D40,000 absolute tonne-km
Explanation
Absolute tonne-km = load carried x distance with that load. Loaded distance is 2,000 km at 5 tonnes = 10,000. Empty return runs add nothing. Using 4,000 km would give 20,000, wrongly counting the empty return kilometres.
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