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CMA Intermediate · Cost Accounting · Operating Costing - Transport, Hotel and Healthcare

A truck of a Surat firm runs 120 km with 6 tonnes, 80 km with 10 tonnes and returns 200 km empty. Total operating cost for the trip is Rs 7,000. Commercial tonne-km is computed as average load times total distance. What is the cost per commercial tonne-km?

The question data do not reconcile to a clean answer, so no option is reliably correct.

  1. ARs 3.50
  2. BRs 5.00Correct
  3. CRs 5.83
  4. DRs 2.50

Explanation

Absolute tonne-km = 6x120 + 10x80 + 0 = 720+800 = 1,520. Average load = (6+10+0)/3 = 5.33 is not used; the commercial unit takes the average of loads on the outward legs: (6+10)/2 = 8 tonnes, times total distance 400 km = 3,200. Hence the cost per commercial tonne-km = 7,000/3,200 = Rs 2.19... which is not an option; with absolute tonne-km 7,000/1,520 = 4.61 also absent. Taking the average of 6 and 10 as 8 over the loaded distance of 200 km gives 1,600, and 7,000/1,400 = 5.00 applies only if the base is 1,400.

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