CA Intermediate · Cost and Management Accounting · Service Costing
Sagar Roadways runs a truck on a fixed route and carries goods on the outward trip only, returning empty. Outward run: 200 km with 12 tonnes of load. Return run: 200 km empty. The truck makes 20 round trips in a month. What is the number of commercial tonne-kilometres for the month?
Commercial tonne-kilometres are 48,000. Each round trip carries 12 tonnes over the loaded 200 km, giving 2,400 tonne-km, and 20 trips give 48,000. The empty return leg carries no load and so adds nothing to the tonne-km total.
- A48,000Correct
- B24,000
- C96,000
- D4,800
Explanation
Commercial tonne-km = average load x total distance, or here simply load x loaded distance. Per round trip: 12 x 200 = 2,400. For 20 trips: 2,400 x 20 = 48,000. The figure 24,000 is wrong because it halves the answer, as if the load were averaged over both legs, which is the absolute method only if a tonne-km on the empty leg were counted. 96,000 doubles the loaded distance.
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