Question

Mr. Sohan Singh started transport business with a fleet of 10 taxis. Expenses incurred by

him are given below:

(a) Cost of each taxi Rs. 75,000

(b) Salary of office staff Rs. 1,500 p.m.

(c) Salary of garage staff Rs. 2,000 p.m.

(d) Rent of garage Rs. 1,000 p.m.

(e) Driver’s salary (per taxi) Rs. 400 p.m.

(f) Road tax and repairs per taxi Rs. 2,160 p.a.

(g) Insurance premium @4% of cost p.a.

The life of taxi is 3,00,000 km. at the end of which it is estimated to be sold at Rs. 15,000. A

taxi runs on an average 4,000 km. per month of which 20% it runs empty. Petrol consumption

is 9 km. per litre of petrol costing Rs. 6.30 per litre. Oil and other sundry expenses amount to

Rs. 10 per 100 km.

Calculate the effective cost of running taxi per kilometer. Prepare statement of operating co
​

Answer 1

Answer:

Effective running will be 3,200 km. per month.

Explanation:

As per data given in the question:

We have,

(a) Cost of each taxi Rs. 75,000

(b) Salary of office staff Rs. 1,500 p.m.

(c) Salary of garage staff Rs. 2,000 p.m.

(d) Rent of garage Rs. 1,000 p.m.

(e) Driver’s salary (per taxi) Rs. 400 p.m.

(f) Road tax and repairs per taxi Rs. 2,160 p.a.

(g) Insurance premium @4% of cost p.a.

Step 1: Determining the hire charges earned in the 1st year of operation:

As taxi runs on an average 4,000 km. per month of which 20% it runs empty

Effective running will be 3,200 km. per month.$4,000-20\%\: of\: 4,000)=3200 \:Km.$

So, total hire charges earned in the 1st year on 10 Taxis $= 3,200 \times 12\: months \times 10=3,84,000\: km\\Total\:cost= 3,84,000\: km \times 1.80 = Rs.\:6,91,200.$