OPERATING COSTING. Q.3. Sainath Travels provide you the following in respect of a fleet of 15 taxies run by them Cost of each taxi

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1 PASSENGER TRANSPORT SERVICES OPERATING COSTING Q.1. Mr. A owns a bus, which runs between Mumbai and Pune and back for 10 days in a month. The distance from Mumbai to Pune is 200 kms. The bus completes the trip from Mumbai to Pune and back on the same day. The bus goes another 10 days in a month to Ratnagiri and the distance covered being 350 kms. The trip is also completed on the same day. For the rest of 4 days it runs in the local city. Daily distance covered in local city is 100 kms. Calculate the rate the person should charge from passenger when he wants to earn a profit of 50% on cost. The other particulars are given below: Cost of Bus Depreciation Salary to Driver Salary to Conductor Salary of Accountant Diesel Consumption Tax Normal Capacity of the bus Rs.72,00,000 20% per annum Rs.48,000 per month Rs.40,000 per month Rs.16,000 per month 6 kms per litre costing Rs.64 per litre Rs.76,800 p.a. Rs.24,000 p.m. 50 passengers The bus is generally occupied 90% of the capacity when it goes to Pune and 80% when it goes to Ratnagiri. It is always full when it runs within the city. Q.2. Zenith Transport Company has given a route 40 kilometers long to run bus. The bus costs the Company a sum of Rs. 1,00,000. It has been insured at 3% p.a. and the annual tax will amount to Rs. 2,000. Garage rent is Rs. 200 per month. Annual repairs will be Rs. 2,000 and the bus is likely to last for 5 years. The driver s salary will be Rs. 300 per month and the conductor s salary will be Rs. 200 per month in addition to 10% of takings as commission (to be shared by the driver and the conductor equally). Cost of stationery will be Rs. 100 per month. Manager-cum-accountant s salary is R per month. Petrol and oil will be Rs. 50 per 100 kilometers. The bus will make 3 up and down thps carrying on an average 40 passengers on each trip. Assuming 15% profit on takings, calculate the bus fare to be charged from each passenger. The bus will run on an average 25 days in a month. Q.3. Sainath Travels provide you the following in respect of a fleet of 15 taxies run by them Cost of each taxi Rs.2,50,000 Salary to the office staff Rs.8,500 p.m. Salary to the driver Rs.3,000 p.m. Salary to the cleaner Rs.2,000 p.m. Rs.3,500 p.m. Insurance 5% per annum on cost of each taxi Taxes Rs.4,800 per annum per taxi Repair Charges Rs.2,400 per taxi per annum A taxi runs in all 3,000 km in a month of which 20% it runs empty. Petrol consumption is one liter for 8 Rs.15 per litre. Oil, grease and other miscellaneous expenses are Rs.25 per 100 km. Calculate the cost of running a taxi per kilometer. 1

2 Q.4. A transport company maintains a fleet of bus as follows: No. of Buses Carrying Capacity passengers each passengers each Each bus makes 5 trips a day, covering a distance of 10 km in each trip. On an average 80% of the seats are occupied in each trip and 5 bus are under repair every day. Assuming that the company operates its fleet daily, ascertain the operating cost per passenger km Wages of 30 drivers Rs.3,000 each per month Wages of 30 cleaners Rs.1,000 each per month Petrol Rs.20,000 per month Oil, Grease etc. Rs.5,000 per month Tyres, Tubes etc. Rs.2,000 per month Rs.30,000 per year Rs.40,000 per year Road Licenses Rs.20,000 per year Taxes Rs.5,000 per half year Interest Rs.25,000 per year Salary of operating manager Rs.5,000 p.m. General Supervision charges Rs.10,000 p.a GOODS TRANSPORT SERVICES Q.5. Balaji Automobiles Distributes its goods to a regional dealer using a single lorry. The regional dealer s premises are 50 k.m. away by road. The lorry has a capacity of 10 tonnes and makes the journey three times a day fully loaded on the outward journeys and empty on return journeys. The following information is available for a four weekly period during the month of March,2006. Cost of Lorry (excluding tyres) Diesel consumption Insurance Cost of tyres Driver s Wages Vehicle Licence cost Rs.18,50,000 6 k.m. per litre Rs.39,000 p.a. Rs.56,000 Rs.2,500 per week Rs.15,600 p.a. Rs.7,800 p.a. Life of lorry Cleaners Wages Diesel Cost Oil Life of Tyres Estimated Sale value of Lorry at the end of its Life Other overhead Cost 4,50,000 k.m. Rs.840 per week Rs.30 per litre Rs.200 per week 30,000 k.m. Rs.500 per week Rs.50,000 Rs.2,08,000 p.a. The lorry operates on six days a week. All costs of incurred per week are in nature of variable. You are required to: (a) Prepare a statement showing the total cost of operating the vehicle for the four weekly period with the breaking of fixed costs and variable cost (b) Calculate vehicle cost per kilometre and per tonne kilometre. A year comprised of 52 weeks. Q.6. A factory of Shailaja Ltd. which uses substantial coal is situated between two colliery X and Y being 5 kms and 10 km distant from the factory respectively. A fleet of lorries of 5 tonne carrying capacity is used for the collection of coal from the pithead. The lorries average a speed of 20 kms per hour when running and regularly take 10 minutes in the factory premises to unload. At colliery X and Y loading time averages 30 minutes and 20 minutes load respectively. Driver s wages, licenses, insurance, depreciation, garage and similar charges are costing Rs.6 per hour operated. Fuel, Oil, and Similar charges or expenses are costing Re per km run.draw up a statement showing the cost per tonne- km of carrying coal from the colliery. If the coal is of equal quality and price at pithead, from which colliery should purchases be made? 2

3 HOTEL SERVICES Q.7. From the following information relating to a hotel Sea View. Calculate the room rent to be charged to give a profit of 25% on cost excluding interest: (i) Salaries of Staff Rs.1,80,000 p.a. (ii) Wages of the room attendant Rs.20 per day. There is room attendant for each room. He is paid wages when the room is occupied. (iii) Lighting, Heating and Power: (a) The normal lighting expense for a room for the whole month is Rs.500, when occupied (b) Power is used only in winter and the charges are Rs.200 for a room, when occupied. (iv) on Building Rs.20,000 (v) Linen etc. Rs.6,000 (vi) Sundries Rs.8,000 (vii) Interior decoration and furnishing Rs.20,000 p.a. (viii) 5% is to be charged on buildings costing Rs.4,00,000 and charge 10% on Equipment. (ix) Interest to be 5% on investment in buildings and equipments amounting to Rs.5,00,000. (x) There are 100 rooms in the hotel. 80% of the rooms are generally occupied in summer and 30% in winter. The period of summer and winter may be considered to be of 6 months in each case. A month may be assumed to be of 30 days. Q.8. Elegant Hotel has a capacity of 100 single rooms and 20 double rooms. It has a sports center with a swimming pool which is also used by persons other than residents of the hotel. The hotel has a shopping arcade at the basement and a specially restaurant at the roof top. The following information is available: (a) Average occupancy: 75% for 365 days of the year. (b) Current costs are: Variable Cost ( per day) Fixed Cost ( per day) Single Room Double Room (c) Average sales per day of restaurant Rs.1,00,000 contribution is at 30% fixed cost Rs.10,00,000 per annum. (d) The sports center/swimming pool is likely to be used by 50 non residents daily average contribution per day per non-resident is estimated at Rs.50 fixed cost is Rs.5,00,000 per annum. (e) Average contribution per month from the shopping arcade is Rs.50,000 fixed cost is Rs.5,00,000 per annum. You are required to find out: (i) Rent chargeable to single and double room per day. So that there is a margin of safety 25% on total cost and that the rent for a double room should be kept at 120% of single room. (ii) Evaluate the profitability of restaurant sports center and shopping arcade separately. Q.9. New Ranjeet Hotel has three types of suites for its customers, viz., Single room, Double Room and Three rooms respectively. State the rent to be charged for each type of suite on the basis of the following information: (i) The number of suites of each type are: (a) Single Room Suites 100 (b) Double Room suites 30 (c) Three room suites 20 (ii) The rent of double room suite is to be fixed at 1.5 times the single room suite and that of three room suite as twice the single room suite. (iii) The occupancy of each type of suite is as under: Summer Winter (a) Single room suites 90% 50% (b) Double room suites 80% 20% (c) Three room suites 60% 20% 3

4 (iv) The annual expenses are as follows: (a) Staff salaries Rs.2,20,000 (b) Room attendants wages when occupied:(per Day) Summer Winter Single room suites Rs.2 Rs.3.00 Double room suites Rs.3 Rs.4.50 Three room suites Rs.4 Rs.6.00 (c) Lighting, heating and power for full month, when occupied: Lighting, heating Power Single room suites Rs.40 Rs.20 Double room suites Rs.60 Rs.30 Three room suites Rs.80 Rs.40 (d) and renovation Rs.42,000 Linen, etc. Rs.45,000 Interior decoration Rs.50,000 Sundries Rs.31,550 (e) Depreciation: 5% on Rs.14,00,000 Furniture and 10% on Rs.1,00,000 Air 10% on Rs.2,00,000 (f) Summer may be assumed for 7 months and winter for 5 months in a year. A month may be taken as of 30 days. (g) Profit including interest on 25% on cost. HOSPITAL SERVICES Q.10. Apollo Hospital runs an Intensive Care Unit in a hired building at a rent of Rs p.m. The Hospital has undertaken to bear the cost of repairs and maintenance. The Intensive Care Unit consists of 35 beds and 5 more beds can be conveniently accommodated whenever required. The permanent staff attached to the unit is as follows: 2 Supervisors, each at a salary of Rs p.m., 4 Nurses each at a salary of Rs p.m., 4 Ward boys each at a salary of Rs.500 p.m. Though the unit was open for the patients all the 365 days in a year but it was found that only 150 days in a year, the unit has the full capacity of 35 patients per day and for another 80 days it had on an average 25 beds only occupied per day. But there were occasions when the beds were full, extra beds were hired from outside at a charge of Rs. 10 per bed per day. This did not come to more than 5 beds extra above the normal capacity any one day. The total hire charges for the extra beds incurred for the whole year amounted to Rs The unit engaged expert doctors from outside to attend on the patients and fees were paid on the basis of the number of patients attended and time spent by them on an average worked out to Rs per month in the year The other expenses for the year were as under: and Maintenance (Fixed) Rs Food supplied to patients (Variable) Rs Janitor and Others Services for patients (Variable) Rs Laundry Charges for their bed linen (Variable) Rs Medicines supplied (Variable) Rs Cost Oxygen, X Ray, etc., (other than directly borne for treatment of patients)(fixed) Rs General Administration Charges allocated to the unit (Fixed) Rs

5 You are required to: a. Calculate the profit per patient day made by the unit in the year 2003 if the unit recovered on the overall amount of Rs. 200 per day on an average from each patient. b. The unit wants to work on a budget for the year 2004, but the number of patients requiring intensive care is a very uncertain factory. Assuming that same revenue and expenses prevail in 2004 in the first instance, work out the number of patient s days required by the unit to break-even. Q.11. Care Hospital operates a fitness center to provide counseling on nutrition, exercise and health care for major surgery patients after their release from the hospital. Average patient will make three visits to the center. Each visit lasts 40 minutes. The hospital has estimated the following costs of operating the center: Particulars Occupancy costs per month Clerical costs per month Other costs per month Medication charges per patient Records charge per patient Staffing cost per visit Computer record update per visit Rs Hospital expects to have an average of 500 visits per month. What should be the amount charged to each patient in order to cover the above costs? 5