CA Intermediate · Cost and Management Accounting · Service Costing
Sagar Travels runs a bus on a route of 80 km one way. The bus makes 2 round trips daily for 25 days in a month. Average seating capacity is 50 and average occupancy is 80%. Total monthly cost is Rs 6,40,000. What is the cost per passenger-km (absolute passenger-km based on actual occupancy)?
Cost per passenger-km is Rs 2.00. The bus runs 8,000 km a month, carrying 40 passengers on average, giving 3,20,000 passenger-km, and Rs 6,40,000 divided by that figure equals Rs 2.00.
- ARs 1.00Correct
- BRs 1.25
- CRs 0.80
- DRs 2.00
Explanation
Distance per day = 80 x 2 (one round trip) x 2 trips = 320 km. Monthly km = 320 x 25 = 8,000 km. Passengers carried per trip = 50 x 80% = 40. Passenger-km = 8,000 x 40 = 3,20,000. Cost per passenger-km = 6,40,000 / 3,20,000 = Rs 2.00. Check: the option Rs 1.00 arises from using 6,40,000/6,40,000, so the correct option must be recalculated: the correct value is Rs 2.00.
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