Question

Cost per passenger-
kilometre is Rs.2.50 and
Distance between two
places is 10 kilometres. Profit
expected is 50% on fare
income. Find fare to be
recovered from each
passenger
Rs. 50
Rs. 37.50
Rs. 25
Rs. 40​

Answer 1

the fare from each passenger to be recovered is 25

Answer 2

The fare to be recovered from each passenger will be ₹37.50.

Step-by-step explanation:

Given: Cost per passenger- kilometre is Rs.2.50

            Distance between two places is 10 kilometres.

            Profit expected is 50% on fare income.

To Find: fare to be recovered from each passenger.

Solution:

• Here, the service costing is used to find out the fare to be recovered from each passenger to earn 50% profit.

Total Distance covered = 10 km

Cost per passenger = ₹2.50

Total cost = 10*2.50 = ₹25

Target profit = 50%

Total Revenue = 25 + 25(50%)

                        = 25 + 12.5

                       = ₹37.50

Thus, the fare to be recovered from each passenger will be ₹37.50.