CA Intermediate · Cost and Management Accounting · Service Costing
A goods carrier owned by Kaveri Logistics makes a trip from Chennai to Bengaluru, 350 km, carrying 10 tonnes, and returns empty. The cost per tonne-km is computed on the basis of absolute tonne-km. What is the absolute tonne-km for the round trip?
The absolute tonne-kilometre for the round trip is 3,500. The outward leg carries 10 tonnes over 350 km, giving 3,500, while the empty return leg contributes nothing. Absolute tonne-km sums actual load times distance on each leg.
- A7,000
- B3,500Correct
- C1,750
- D350
Explanation
Absolute tonne-km is the sum of load carried times distance for each leg. Outward: 10 x 350 = 3,500. Return: 0 x 350 = 0. Total = 3,500. The figure 7,000 wrongly assumes a load on both legs.
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