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CA Intermediate · Cost and Management Accounting · Service Costing

Gupta Logistics owns a truck costing Rs 12,00,000 with a residual value of Rs 2,00,000 and a life of 5 years, depreciated on a straight-line basis. The truck runs 2,500 km a month with a 10-tonne capacity, carrying a full load on outward trips and returning empty (so the loaded distance is half the total). Monthly running costs, excluding depreciation, are Rs 90,000 and insurance and licence are Rs 1,20,000 a year. Cost per tonne-km, on the loaded-distance basis with the full 10 tonnes, is closest to:

Cost per tonne-km is about Rs 9.33, so Rs 9.60 is the closest option. Monthly cost is Rs 16,667 depreciation plus Rs 10,000 insurance plus Rs 90,000 running, which is Rs 1,16,667, divided by 12,500 tonne-km (1,250 loaded km x 10 tonnes).

  1. ARs 8.80
  2. BRs 9.60Correct
  3. CRs 10.40
  4. DRs 11.20

Explanation

Depreciation per month = 10,00,000/5/12 = Rs 16,667. Insurance per month = Rs 10,000. Running = Rs 90,000. Total = Rs 1,16,667. Loaded km = 1,250, so tonne-km = 12,500. Cost = 116,667/12,500 = Rs 9.33. This is closest to Rs 9.60, whereas using total km (25,000 tonne-km) gives Rs 4.67, which is not an option.

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