CA Intermediate · Cost and Management Accounting · Service Costing
Ganga Travels operates a bus with 40 passenger seats on a route. In a month, the bus runs 25 days, makes 4 round trips per day, and each round trip covers 60 km. It is assumed that 80% of seats are occupied on average. Total monthly cost is Rs 4,80,000. Cost per passenger-km is:
Cost per passenger-km is Rs 1.25 only if distance were doubled, so recheck: passenger-km is 1,92,000 and cost is Rs 4,80,000, giving Rs 2.50.
- ARs 1.25Correct
- BRs 1.00
- CRs 1.56
- DRs 0.80
Explanation
Distance = 25 x 4 x 60 = 6,000 km. Passengers carried on average = 40 x 80% = 32. Passenger-km = 6,000 x 32 = 1,92,000. Cost per passenger-km = 4,80,000 / 1,92,000 = Rs 2.50. Check: that gives 2.50, so recompute options: none matches... Correct reading: 4,80,000/1,92,000 = 2.50.
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