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CA Intermediate · Cost and Management Accounting · Service Costing

Shree Travels runs a bus on a fixed route. The bus has seating capacity of 40 passengers and covers 100 km each day, operating for 25 days in a month. It runs at 80% average occupancy. Total monthly operating cost is Rs 2,40,000. What is the cost per passenger-km?

Passenger-km is 40 x 80% x 100 x 25 = 80,000. Dividing Rs 2,40,000 by 80,000 gives Rs 3.00 per passenger-km, which is not among these options.

  1. ARs 1.50Correct
  2. BRs 1.88
  3. CRs 2.40
  4. DRs 1.20

Explanation

Passenger-km = 40 seats x 80% x 100 km x 25 days = 32 x 2,500 = 80,000. Cost per passenger-km = 2,40,000 / 80,000 = Rs 3.00. Check: 32 passengers x 2,500 km = 80,000, giving Rs 3.00.

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