SOLUTIONS TO ASSIGNMENT PROBLEMS. Problem No.1

Size: px

Start display at page:

Download "SOLUTIONS TO ASSIGNMENT PROBLEMS. Problem No.1"

Martina Thomas
5 years ago
Views:

1 SOLUTIONS TO ASSIGNMENT PROBLEMS Problem No.1 3. OPERATING COSTING Calculation of passenger km: Onward: 25 days x 3 trips x 20 km x 12 months 18,000 x 40 passengers 7,20,000 pass. Km. Return: 25 days x 3 trips x 20 km x 12 months 18,000 x 40 passengers 7,20,000 pass. Km 14,40,000 Kilometers 36,000kms Calculation of Total cost: Particulars Amount Depreciation (1,00,000 / 5) 20,000 Insurance (1,00,000 x 3%) 3,000 Annual Road tax 2,000 Garage rent (400 x 12m) 4,800 Annual repairs 2,360 Salary to driver & conductor (800 x 12m) 9,600 Manager Salary (1,400 x 12m) 16,800 Stationery (100 x 12m) 12,000 Petrol & oil cost (3600 x 50 / 100) 18,000 Total cost before commission 77,760 (+) commission (10% on takings) 10,368 Total Cost 88,128 (+) Profit (15% on takings) 15,552 Total takings 1,03,680 Fare/ pass. Km 1,03,680 14,40,000 Rs / pass.km Problem No. 2 Calculation of Total kms. covered per month: Bus Route Km. per trip Trips per day Days per month Km. per month Delhi to Chandigarh ,000 Delhi to Agra ,200 Delhi to Jaipur ,240 11,440 IPCC_34e_Costing _ Operating Costing_ Assignment Solutions 8

2 No.1 for CA/CWA & MEC/CEC MASTER MINDS Calculation of Passenger kms. per month: Delhi to Chandigarh & Back Total seats available per month (100% capacity) Capacity utilized % Seats Km. per trip Passenger Km. per month 800 * ,80,000 Delhi to Agra & Back ,78,500 Delhi to Jaipur & Back 600 # ,62,000 Total 5,20,500 * 50 seats X 2 trips X 8 days = seats X 2 trips X 10 days = 1,000 seats # 50 seats X 2 trips X 6 days = 600 seats Now, the operating cost can be found out as under: (i) Running Costs: Monthly Operating Cost Statement Variable Costs Rs. Rs. Diesel [(11,440 km 4 km) X Rs. 46] 1,31,560 Lubricant oil [(11,440 km 100) Rs. 10] ,32,704 (ii) Maintenance Costs: Repairs & Maintenance 1,000 (iii) Standing charges: Salary of driver 2,800 Salary of conductor 2,200 Salary of parttime accountant 200 Insurance (Rs. 4,800 12) 400 Road tax (Rs. 1,500 12) 125 Permit fee 315 Depreciation (Rs. 6,00,000 20%) 12 10,000 16,040 Total costs per month (i)+(ii)+(iii) 1,49,744 Profit and Passenger 100% of cost (Note below) 1,49,744 Total takings per month 2,99,488 Passenger km. per month 5,20,500 Rate per passenger km. = (Rs. 2,99,488 5,20,500) = Rs say Rs Proposed fare to be charged per passenger km. Delhi to Chandigarh = Rs km = Rs Delhi to Agra = Rs km = Rs Delhi to Jaipur = Rs km = Rs Note: 1. Passenger tax = 20% of total takings 2. Profit = 30% of total takings IPCC_34e_Costing _ Operating Costing_ Assignment Solutions 9

3 3. Passenger tax + Profit = 50% of total takings 4. Cost (balance) = 50% 5. Total takings = 100% 6. Item 3 as a % of item 4 = 100% Passenger tax (20% of Rs. 2,99,488) = Rs. 59, Profit (30% of Rs. 2,99,488) = Rs. 89, Rs. 1,49, StepI: Calculation of total km & passenger kms: Problem No.3 Guntur to Tirupathi 10 days X 250 kms X 2 = 5000 km X 50 pass X 90% = 2,25,000 pass. km Guntur to Kalahasthi 10 days X 200 kms X 2 = 4000 km X 50 pass X 80% = 1,60,000 pass. km Local Trip: 5 days X 60 km = 300 km X 50 pass = 4,00,000 pass. km StepII: Calculation of total cost for the month: 9300 km 4,00,000 pass. km Particulars Amount Depreciation (3,50,000 X 25% X 1/12) 7,292 Drivers Salary 1,200 Conductors Salary 1,000 Part time clerk Salary 400 Insurance (1800 X 1/12) 150 Diesel Consumption (9,300 X 8/4) 18,600 Token tax 200 Permit fee 1,000 Lubricant oil (9,300 X 100 / 200) 4,650 Repairs & Maintenance 1,500 Total cost before passenger tax (46.67%) 35,992 (+) Passenger tax (20% on takings) (20%) 15,424 Total cost (66.67%) 51,416 (+) Profit (1/3 on takings) (33.33%) 25,704 Total takings (100%) 77,120 StepIII: Fare / Passengers km 77,120 4,00,000 pass.km=rs / pass. km Fare / Passenger from Guntur to Tirupathi = 250 p. km x Rs Fare / Passenger from Guntur to Kalahasthi = 200 p. km x Rs IPCC_34e_Costing _ Operating Costing_ Assignment Solutions 10

4 No.1 for CA/CWA & MEC/CEC MASTER MINDS Problem No.4 Statement showing fare per passenger Km. Particulars Amount Amount standing charges (Fixed cost) Depreciation x Insurance charges x3% Manager cum Accountant salary ,000 Annual tax 12 Garage rent Maintenance charge [ semi var. c] 150,000 Repairs & Maintenance Running cost Drivers salary Conductor s salary Stationery Engine oil & lubricants 2500 x Diesel & oil x3000km km Total cost excluding commission to driver & conductor (+) 10% on taking (+) 15% on takings (100 x 15%) Takings (a) (let) No of passenger km (b) = (3hrs x 2 x 20 km x 25 day = 3000 km x 40 passenger) Fare per passenger km (a/b) = Rs StepI: Problem No.5 Calculation of absolute ton km: Vehicles x trips x km x tons x capacity 30 x 5 x 6 x 5 T x 50% 2,250 T.km x 30 days 67,500 T.km 40 x 5 x 6 x 3 T x 50% 1,800 T.km x 30 days 54,000 T.km 50 x 5 x 6 x 2 T x 50% 1,500 T.km x 30 days 45,000 T.km 40 x 5 x 6 x 4 T x 50% 2,400 T.km x 30 days 72,000 T.km 2,38,500 T.km () 10% laid up for repairs 23,850 T.km StepII: 2,14,650 T.km IPCC_34e_Costing _ Operating Costing_ Assignment Solutions 11

5 Calculation of total cost for the month: Salary to superintendent (1,800 x 50%) 900 Salary to foremen (4 x 600) 2,400 Wages for drivers (200 x 100) 20,000 Wages for labourers (80 x 300) 24,000 Consumables 20,000 Petrol 80,000 Lubricants 10,000 Replacement of tyres 6,000 Garage Rent 2,500 Gas 800 Miscellaneous 15,000 Workshop Expenses 15,000 Total Cost 1,96,600 StepIII: Calculation of cost % T.km Cost / T.km 1,96,600 Rs. 0.92/ T.km 2,14,650 Copy Rights Reserved To MASTER MINDS, Guntur Problem No.6 StepI: Calculation of total km & Tons km: Vehicle Journey x distance x days x weeks km x tones T.km 1 6 x 10 km x 5 x 50 15,000 x 4T 60,000 T.km 2 4 x 20 km x 5 x50 20,000 x 4T 80,000 T.km 3 2 x 40 km x 5 x 50 20,000 x 5T 1,00,000 T.km 4 2 x 30 km x 5 x 50 15,000 x 6T 90,000 T.km 5 1 x 60 km x 5 x 50 15,000 x 6T 90,000 T.km Onward 85,000 km 4,20,000 T.km (+) Return 85,000 km 0 T.km Total 1,70,000 km 4,20,000 T.km StepII: Calculation of Total cost for the year: Maintenance Cost ( for 1,70,000 kms) 1,35,000 Drivers wages (600 x 50 weeks x 5 drivers) 1,50,000 Supervisors Salary (800 x 50 weeks) 40,000 Depreciation on loading equipment (1,00,000/5 Years) 20,000 Depreciation on Vehicles ( 30,000 x 5 ) 5 Years 30,000 IPCC_34e_Costing _ Operating Costing_ Assignment Solutions 12

6 No.1 for CA/CWA & MEC/CEC MASTER MINDS Petrol (1,70,000 x Rs. 8) 13,60,000 Repairs (1,70,000 x Rs. 1) 1,70,000 Insurance (2,400 x 5 vehicles) 12,000 License Cost (1,600 x 5 vehicles) 8,000 Tyres Cost 18,000 Miscellaneous Cost 17,000 Total Cost 19,60,000 StepIII: Calculation of cost / Tons km Cost / Tons km = 19,60,000 4,20,000T.km Standard charges(fixed cost) Driver s 4500 P.M Cleaner s 3500 P.M License fee, Taxes 8600 p.a 10,000 p.a 1,00,000 p.a = Rs. 4.67/T.km Problem No. 7 Statement showing operating cost Particulars Per bus/p.a 5 buses/p.a (4500 x 12) (4500 x 12 x 5) Maintenance charges Repirs & p.a Operating charges: Diesel (8km x 4 times x 2 way x 25 day x 9 months) x total cost Cost per month (a) Rs ( x 5) No of students on half fare bases (b) (50 x 50% x x 50%) x (150 x 5) Cost per student (half fare) (a/b) Cost per student( full fare) 420 (210 x 2) 420 Problem No. 8 (i) Total equivalent single room suites Nature of suite Occupancy Equivalent single room suites Single room suites % = 36,000 36,000 1 = 36,000 Double rooms suites % = 14,400 14, = 36,000 Triple rooms suites % = 6,480 6,480 5 = 32,400 Total 1,04,400 (ii) Statement of total cost: IPCC_34e_Costing _ Operating Costing_ Assignment Solutions 13

7 Staff salaries 14,25,000 Room attendant s wages 4,50,000 Lighting, heating and power 2,15,000 Repairs and renovation 1,23,500 Laundry charges 80,500 Interior decoration 74,000 Sundries 1,53,000 Particulars Calculations Cost/Km Depreciation 50,000 10,000 p.a ( m) 0.33 ps. 5 IPCC_34e_Costing _ Operating Costing_ Assignment Solutions 14 Rs. 25,21,000 Building rent 10, % on total taking 1,20,000 Total cost Profit is 20% of total takings Total takings = Rs. 26,41, % of total takings Let x be rent for single room suite Then 1,04,400 x = 26,41, % of (1,04,400 x) or 1,04,400 x = 26,41, ,100 x or 78,300 x = 26,41,000 or x = (iii) Rent to be charged for single room suite = Rs Rent for double rooms suites Rs = Rs Rent for triple rooms suites Rs = Rs Calculation of cost per kwh: Problem No.9 + 5% on takings 26,41, % on total takings Operating labour 50,000 Repairs & maintenance 50,000 Lubricants, spares & stores 40,000 Plant super vision 30,000 AOH 20,000 Coal (10,00,000 x 2.5 x 0.02) 50,000 Depreciation 10,000 Total Cost 2,50,000 2,50,000 Cost per kwh = = ,00,000 Existing Proposal: Own a car Problem No. 10 Calculation of cost per Km. under various proposals

8 No.1 for CA/CWA & MEC/CEC Petrol & Oil Tyres Repairs Taxes Driver wages Total Cost Proposal 1: Car taken on Hire basis ,000 Km 720 2,000 Km MASTER MINDS 0.65 ps ps ps ps ps ps. Rs.1.61 ps. Particulars Calculations Cost /Km Hire charges 800/ 2,000 km 0.40 ps. Petrol 0.65 ps. Oil 0.08 ps. Tyres 0.07 ps. Total Cost Rs ps. Proposal 2: Employee s own car Particulars Calculations Cost/km. Cost of interest Petrol Maintenance & Drivers wages 25,000 18% 24,000 Km 500 2,000 Km 0.19 ps ps ps. Total Cost Rs.1.09 ps. Existing Proposal Proposal 1 Proposal 2 Ranking of three proposals basing on Cost per Km. Particulars Cost per Km. Rank 1.61ps 1.20ps 1.09ps Decision: As cost per unit in proposal 2 is less, it is better to accept that proposal. Problem No. 11 Particulars Present Situation Fare Reduction Proposal Number of Passengers 160 x 60% = 96 Given = 108 Gross Revenue per Flight Less: Variable Costs per Flight Fuel Food to Passengers Commission at 5% of Gross Revenue 96x 7,200 = 6,91,200 96, x 125 = 12,000 34,560 Contribution per Flight 5,48,640 5,79,972 Less: Fixed Costs per Flight IPCC_34e_Costing _ Operating Costing_ Assignment Solutions 15 III II I 108 x 6,720 = 7,25,760 96, x 125 = 13,500 36,288

9 Aircraft Lease 3,50,000 3,50,000 Landing Charges 72,000 72,000 Net Operating Income per Flight 1,26,640 1,57,972 Decision: The Fare Reduction Proposal (and consequent increase in the number of passengers) will increase the Operating Income per Flight by Rs.1,57,972 Rs.1,26,640 = Rs.31,332. Hence, the proposal is worthwhile. Problem No.12 Step1: Calculation of total Absolute tonne Kms. P Q : 40 Kms. 10 tonne = 400 tonne Kms Q R : 60 Kms. 6 tonne = 360 tonne Kms R P : 80 Kms. 8 tonne = 640 tonne Kms Total =1400 tonne Kms. Absolute tonne Kms. =1,400 P 40km 60km 10T Q 8 T 80km 6T R Step 2: Calculation of Commercial tonne Kms. Aggregate distance Average tonnage = ( ) = = 1440 tonne Kms. 3 Commercial tonne Kms. = 1440 THE END IPCC_34e_Costing _ Operating Costing_ Assignment Solutions 16

= 21,60,000. = Solution to Q. 2 Working Notes:

= 21,60,000. = Solution to Q. 2 Working Notes: C.A. FINAL Solution to Q. 1 1) Calculation of total kms. for the year Kms. per round trip Round trips per day Days per month No. of months p.a. (30 2) 6 25 12 1,08,000 kms. 2) Calculation of total passenger