Q 6. Mr. Harry is a Travelling Inspector for the me Environmental Protection Agency. He uses his
own car and the agency reimburses him at Rs. 1.80 per kilometer. Mr. Harry claims he needs Rs.
2.20 per kilometer just to break-even. A scrutiny of his expenses by the agency reveals the
following
Oil change every 4,800 kms. Rs. 120
Every 9,600 kms 1,800
Yearly insurance (comprehensive with accident benefits) 4,000
Cost of car, with an average residual value of Rs. 60,000 and with a useful life of 3 years
Rs. 1,08,000
Petrol is Rs. 5 a litre and Harry gets 8 kms per liter in his car. When harry is on the road. He
averages 192 kilometers a day. He works 5 - days a week, has 10 days vacation in a year
besides 6 holidays and spends 15 working days a month, in the office. You are required to
determine :
(a) An equitable rate of reimbursement on the basis of the schedule he presently follows and
(b) The number of kilometers a year he would have to travel, to break even at the current
rate of reimbursement.
Answers
Answer:
Q 6. Mr. Harry is a Travelling Inspector for the me Environmental Protection Agency. He uses his
own car and the agency reimburses him at Rs. 1.80 per kilometer. Mr. Harry claims he needs Rs.
2.20 per kilometer just to break-even. A scrutiny of his expenses by the agency reveals the
following
Oil change every 4,800 kms. Rs. 120
Every 9,600 kms 1,800
Yearly insurance (comprehensive with accident benefits) 4,000
Cost of car, with an average residual value of Rs. 60,000 and with a useful life of 3 years
Rs. 1,08,000
Petrol is Rs. 5 a litre and Harry gets 8 kms per liter in his car. When harry is on the road. He
averages 192 kilometers a day. He works 5 - days a week, has 10 days vacation in a year
besides 6 holidays and spends 15 working days a month, in the office. You are required to
determine :
(a) An equitable rate of reimbursement on the basis of the schedule he presently follows and
(b) The number of kilometers a year he would have to travel, to break even at the current
rate of reimbursement.