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CA Intermediate · Cost and Management Accounting · Service Costing

Sunrise 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 operating cost is Rs 8,00,000. What is the cost per passenger-km (absolute passenger-km based on actual passengers carried)?

The cost per passenger-km is Rs 2.50. Monthly distance is 320 km a day times 25 days, which is 8,000 km. With 40 passengers on average, passenger-km is 3,20,000. Dividing the Rs 8,00,000 cost by 3,20,000 gives Rs 2.50.

  1. ARs 2.50Correct
  2. BRs 3.13
  3. CRs 2.00
  4. DRs 5.00

Explanation

Distance per day = 80 x 2 (round trip) x 2 trips = 320 km. Monthly km = 320 x 25 = 8,000 km. Passengers = 50 x 80% = 40. Passenger-km = 8,000 x 40 = 3,20,000. Cost per passenger-km = 8,00,000 / 3,20,000 = Rs 2.50. Using 50 passengers would give Rs 2.00, ignoring occupancy.

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