CA Intermediate · Cost and Management Accounting · Service Costing
A school bus is bought by Vidya Niketan for the staff transport service. Monthly costs: driver salary Rs 18,000, fuel Rs 24,000, insurance and tax Rs 6,000 (monthly equivalent), depreciation Rs 12,000. The bus runs 3,000 km in the month carrying on average 20 passengers on each km. Cost per passenger-km is:
The cost per passenger-km is Rs 1.00. Total monthly cost is Rs 60,000 and passenger-kilometres are 3,000 km times 20 passengers, which is 60,000. Dividing cost by passenger-km gives Re 1 per passenger-kilometre.
- ARs 1.00Correct
- BRs 20.00
- CRs 0.05
- DRs 0.50
Explanation
Total cost = 18,000 + 24,000 + 6,000 + 12,000 = Rs 60,000. Passenger-km = 3,000 x 20 = 60,000. Cost per passenger-km = 60,000 / 60,000 = Rs 1.00. Rs 20 is the cost per km, obtained by ignoring the passenger count, and Rs 0.05 results from dividing per km cost by passengers twice.
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