CA Intermediate · Cost and Management Accounting · Service Costing
Shree Travels runs a bus on a fixed route. Total operating cost for a month is ₹3,06,000. The bus has 40 seats and runs 25 days a month, making 2 round trips daily. Each one-way trip covers 90 km. Assume all seats are occupied in every trip. What is the cost per passenger-km (absolute passenger-km)?
The cost per passenger-km is ₹0.85. Monthly distance is 9,000 km (four one-way trips of 90 km for 25 days), giving 3,60,000 passenger-km with 40 seats full. Dividing the total cost of ₹3,06,000 by 3,60,000 gives ₹0.85.
- A₹0.85Correct
- B₹1.70
- C₹0.425
- D₹3.40
Explanation
Trips per day = 2 round trips x 2 ways = 4 one-way trips; km per day = 4 x 90 = 360; monthly km = 360 x 25 = 9,000. Passenger-km = 9,000 x 40 = 3,60,000. Cost per passenger-km = 3,06,000 / 3,60,000 = ₹0.85. The ₹1.70 option wrongly uses only half the distance (one-way trips counted as round trips only in the opposite direction).
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