Transport Costing  Service Costing  Passenger Km  Ton Km
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There are two types of business firms; goods selling firms or service providing or rendered firms.
Service costing is a type of operation costing which is used in service providing organizations.
In this service cost accounting, all the costs incurred in the production of a service are added together.
These costs are fixed costs, semivariable costs and variable costs.
The sum of these costs is known as total cost.
The total cost is divided by the total units to find out per unit cost..
Service costing is followed by the service industries.
Generally there are two types of services.
They are internal services and external services.
Internal services
Services provided by sections and departments to the production department are called internal service.
External services
Services provided to public utility are called external service; they are:
Transport services
Supply services
Welfare services
Municipal services
The service provided to public directly by undertaking is called service costing.
These services may be rendered by a company to the public or same for internal use of manufacturing.
There are different types of services; they are:
Transport services
bus, truck, taxi, auto rickshaws, cable car, tramways, trolley bus, railways, seaways, airways, steamer etc.
Supply service
Water, electricity (power house, boiler house), telephone/mobile/internet, gas etc
Welfare service
Hospital, nursing home, education institute (school, college, university), library, cinema, park, hospital, hotel, canteen etc.
Municipality service
Street light, road maintenance, sewage etc.
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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2054, Q: 9
Nepal Yatayat Company gives you the following information:
Transactions 
Amount (Rs) 

Amount (Rs) 
Cost of bus with expected 100,000 km run 

Driver’s salary per month 
Rs 14,000 
Annual registration and renewal charge 
Rs 12,000 
Conductor’s salary per month 
Rs 8,000 
Garage charge per month 
Rs 5,000 
Diesel and oil per km 
Rs 14 
Annual repairs 
Rs 24,000 


The bus will run 25 days in a month with 40 passengers in 10 round trips of 20 km long route.
Required: (a) Operating cost sheet by showing standing charge and running charge separately; (b) Cost per passenger km
[Answer: (a) TOC (30,000 + 200,000) = Rs 230,000;
(b) CPPKm = Re 0.58; *Depn = Rs 60,000; Diesel = Rs 140,000]
SOLUTION:
Given and working note:
Total running km in a month 
Depreciation per month 
= 25 days × 10 trips × 2 ways × 20 km 
= (Rs 600,000 ÷ 100,000 km) × 10,000 km per month 
= 10,000 km 
= Rs 60,000 




Total passenger km 
Diesel and oil per month 
= 10,000 km × 40 passengers 
= 10,000 km × Rs 14 
= 400,000 
= Rs 140,000 


Operating Cost Sheet
Nepal Yatayat Company
(For 1 month)
Particulars 
Amount 
Standing/fixed charges: 
^{ } 
Registration and renewal charge (Rs 12,000 ÷ 12 months) 
1,000 
Garage rent 
5,000 
Repairs (Rs 24,000 ÷ 12 months) 
2,000 
Driver’s salary 
14,000 
Conductor’s salary 
8,000 
Total A 
30,000 
Running/variable charges: 

Depreciation 
60,000 
Diesel and oil 
140,000 
Total B 
200,000 
Total operating cost (A+B) 
Rs 230,000 
Total passenger km 
400,000 km 
Cost per passenger km = Total operating cost ÷ Total passenger km 
Re 0.58 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2055, Q: 15
National Transport Company gives you the following expenses:
Annual expenses:
Road license 
Rs 3,000 
Insurance charge 
Rs 2,000 

Garage rent 
Rs 24,000 
Driver’s salary 
Rs 13,000 

Other expenses 
Rs 23,000 





Additional information: 

Cost of vehicle 
Rs 900,000 
Estimated life 
300,000 km 

Estimated annual km 
20,000 km 
Cost of petrol per liter 
Rs 28 

Kilometer mileage per liter 
10 km 



Required: Operating cost sheet showing annual total cost
[Answer: Total operating cost (65,000 + 116,000) = Rs 181,000]
SOLUTION:
Given and working note:
Depreciation per year
= (Rs 900,000 ÷ 300,000 km) × 20,000 km
= Rs 60,000
Petrol cost per year
= (20,000 km ÷ 10 km) × Rs 28
= Rs 56,000
Operating Cost Sheet
National Transport Company
(For 1 year)
Particulars 
Amount 
Standing/fixed charges: 
^{ } 
Road license 
3,000 
Garage rent 
24,000 
Other expenses 
23,000 
Insurance charge 
2,000 
Driver’s salary 
13,000 
Total A 
65,000 
Running/variable charges: 

Depreciation 
60,000 
Petrol cost 
56,000 
Total B 
116,000 
Total operating cost (A+B) 
Rs 181,000 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2058, Q: 15
Scrutiny of the daily log book rendered by ABC Transport Company that owned a 40 setter fleet of 5 buses provided the following particulars:
Normal passengers traveled 90%
Annual depreciation registration and insurance per bus Rs 54,000
Fuel, lubricating oil, repair and maintenance etc per 25 km Rs 450
Drivers and helpers’ salary for 5 fleets per month Rs 37,500
Profit expected by the company is 20% on freight.
Each bus operated 4 round trips daily of 10 km distance each way for 25 days in a month.
Required: (a) Monthly standing charge; (b) Monthly operating charges; (c) Monthly profit;
(d) Freight to be charged per passenger km
[Answer: (a) Standing = Rs 60,000; (b) Running = Rs 180,000; Total = Rs 240,000;
(c) Monthly profit = Rs 60,000; (d) Freight per passenger/km = Re 0.83;
* Running km = 10,000; passenger km = 360,000;
* Fuel cost = Rs 180,000;
SOLUTION:
Given and working note:
Total running km in a month 
Depreciation per month 

= 5 buses × 25 days × 4 trips × 2 ways × 10 km 
= (Rs 54,000 ÷ 12 months) × 5 buses 

= 10,000 km 
= Rs 22,500 







Total passenger km 
Diesel and oil per month 

= 10,000 km × 40 passengers × 90% 
For 25 km 
= Rs 450 
= 360,000 p/km 
For 10,000 km 
= 450 × 10,000 ÷ 25 


= Rs 180,000 


Operating Cost Sheet
ABC Transport Company
(For 5 buses, one month)
Particulars 
Amount 
Standing/fixed charges: 
^{ } 
Depreciation 
22,500 
Drivers and helpers’ salary 
37,500 
Total A 
60,000 
Running/variable charges: 

Fuel, lubricating oil etc 
180,000 
Other expenses 
Nil 
Total B 
180,000 
Total operating cost (A+B) 
Rs 240,000 
Add: Profit (240,000 × 20/80) 
60,000 
Total freight 
Rs 300,000 
Freight per passenger per km = Total freight ÷ Total passenger km = (Rs 300,000 ÷ 360,000 p/km) 
Re 0.83 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
TU: 2060/S Modified
Highway Cargo supplies the following information relating to a mini truck of 6 ton capacity that makes one trip daily covering distance of 30 km each way and carrying goods in full capacity on outward trip and on return only 20% of the capacity:
Capital cost of truck 
Rs 12,00,000 
Yearly taxes and renewal 
Rs 10,800 
Estimated life 
20 years 
Monthly wages of the driver 
Rs 12,000 
Residual value at end of life 
Rs 200,000 
Yearly insurance charges 
Rs 19,200 
Repairs and maintenance cost per month 
Rs 4,000 
Fixed general expenses yearly 
Rs 36,000 
Monthly wages of the helper 
Rs 5,000 
Fuel each or one way per trip 
Rs 440 
In an average the truck run 26 days in a month
Required: (Operating cost sheet)
(1) Total tons km; (b) Fixed and variable cost and total cost; (c) Cost per month per ton km.
[Answers: Fixed = Rs 26,667; Variable = Rs 26,880; Total = Rs 53,547;
Cost per ton per km = Rs 9.53; *Depreciation = Rs 4,167]
SOLUTION
Given and working note:
Depreciation
= (Purchase value – Book salvage value) ÷ Life
= (12,00,000 – 2,00,000) ÷ 1/12
= Rs 4,167
Total tons km
Ton/km 
= (6 ton @ 100% × 30 km × 26 days) + (6 tone@ 20% × 30 km × 26 days) 

= 4,680 + 936 

= 5,616 
Operating Cost Sheet
A Highway Carriers
(for 1month)
Particulars 
Amount 
Standing/fixed charges: 
^{ } 
Wages to helper 
5,000 
Taxes and renewal (Rs 10,800 ÷ 12 months) 
900 
Wages to driver 
12,000 
Insurance (Rs 19,200 ÷ 12 months) 
1,600 
Fixed general expenses (Rs 36,000 ÷ 12 months) 
3,000 
Depreciation 
4,167 
Total A 
26,667 
Running/variable charges: 

Fuel cost (Rs 440 per trip ×2 ways × 26 days) 
22,880 
Repairs and maintenance 
4,000 
Total B 
26,880 
Total operating cost (A+B) 
Rs 53,547 
Total tonkm 
5,616 
Cost per ton per km = Total operating cost ÷ Total tonkm 
Rs 9.53 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2061/Second, Q: 8
A microbus operates 8 round trips each day for 30 days a month between 20 km apart newly urbanized two cities.
The bus has 15 passenger sitting capacity.
The average seat occupancy is 80%.
The monthly operating expenses are given below:
Driver and helper’s salary 
Rs 19,200 
Repairs and maintenance expenses 
Rs 11,520 
Route license, insurance and garage rent per month 
Rs 9,600 
Cost of the micro bus expecting to run for 10 years 
Rs 20,73,600 
Average all fuel cost per km 
Rs 16.50 
Required: (Operating cost statement showing)
(a) Total km and passenger km; (2) Total cost reporting showing standing charges and running expenses
(c) Bus fare per passenger per km expecting 20% profit on cost
[Answer: Total km = 9,600; Total passenger km = 115,200;
Standing = Rs 46,080; Running = Rs 169,920; Total cost = Rs 216,000;
Profit = Rs 43,200; Bus fare per passenger per km = Rs 2.25;
*Depreciation = Rs 17,280;
SOLUTION
Total km
= 20 km × 8 trips × 2 ways × 30 days
= 9,600 km
Total passenger km
= 9,600 km × 15 passengers × 80%
= 115,200 km
Depreciation per month
= Rs 20,73,600 ÷ 10 years × 1/12 month
= Rs 17,280
Operating Cost Sheet
(For 1 month)
Particulars 
Amount 
Standing/fixed charges: 
^{ } 
Driver and helper’s salary 
19,200 
Route license, insurance and garage rent 
9,600 
Depreciation 
17,280 
Total A 
46,080 
Running/variable charges: 

Repairs and maintenance 
11,520 
Average fuel cost (9,600 km × Rs 16.50) 
158,400 
Total B 
169,920 
Total monthly charges (A+B) 
216,000 
Add: profit [20% on cost viz 216,000 @ 20%] 
43,200 
Total revenue 
Rs 259,200 
Total passenger km 
115,200 
Bus fare per passenger per km = Total revenue ÷ Total passenger km 
Rs 2.25 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2063, Q: 7
ABC Transport Company which owned 10 buses supplied the following details:
Cost of each van 
Rs 24,00,000 
Life of vans 
5 years 
Value of each van after 5 years 
Rs 6,00,000 
Seating capacity of each van 
25 persons 
Normal passengers traveled of seating capacity 
80% 
Distance covered by each bus per day 
100 km 
Total running days per month 
26 days 


Operating costs for running 10 vans: 


Amount 
Salaries of office and supervision staffs per month 
65,000 
Oils for one month 
1,60,000 
Repairs and maintenance per month 
11,000 
Taxation and insurance for one year 
1,20,000 
Annual interest and other charges 
60,000 
Rent of garage per month 
15,000 
Wages of drivers, conductors and cleaners per month (Allocated on the basis of mileage run) 
1,20,000 
Profit expected by the company is 25% on cost
Required: (Operating cost statement): (1) Total km and passenger km; (2) Monthly running charge, standing charge and total cost; (3) Monthly profit; (4) Fare to be charged per passenger per kilometer
[Answer: (1) Total km = 26,000; Passenger km = 520,000;
(2) Standing = Rs 395,000; running = Rs 291,000; Total = Rs 686,000;
(3) Profit = Rs 171,500 and (4) Charge per km = Rs 1.65;
* Depreciation = Rs 300,000]
SOLUTION
Total km
= 10 buses × 100 km per day × 26 days
= 26,000 km
Passenger km
= Total km × Normal Capacity
= 26,000 km × 25 persons@80%
= 520,000 km
Given and working note:
Depreciation
= (PV – BSV) ÷ Life
= (24,00,000 × 10 – 6,00,000 × 10) ÷ 5 years × 1/12
= 1,80,00,000 ÷ 5/12
= Rs 300,000
Operating Cost Sheet
ABC Transport Company
(For 10 vans, 1 month)
Particulars 
Amount Rs 
Standing/fixed charges: 
^{ } 
Salary of office and supervision staff per month 
65,000 
Taxation and insurance (Rs 120,000 ÷ 12 months) 
10,000 
Annual interest (Rs 60,000 ÷ 12 months) 
5,000 
Rent for garage 
15,000 
Depreciation 
300,000 
Total A 
395,000 
Running/variable charges: 

Oil for month 
160,000 
Wages for driver, conductor and cleaner (mileage based) 
120,000 
Repairs and maintenance 
11,000 
Total B 
291,000 
Total monthly charges (A+B) 
686,000 
Add: Profit (25% on cost viz 686,000@ 25%) 
171,500 
Total revenue 
Rs 857,500 
Total passenger km 
520,000 km 
Fare per passenger per km = Total revenue ÷ Total passenger km 
Rs 1.65 
######
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######
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TU: 2065 Modified
ABC Transport Company supplies the following information relating to a microbus with the capacity of carrying 20 passengers. It makes 5 round trips daily covering distance of 5 km. It carries the passenger with 80% capacity for 25 days in a month. Other relevant information is:
Particulars 
Amount in Rs 
Particulars 
Amount in Rs 
Cost of microbus 
15,00,000 
Taxes and renewal charge 
12,000 per year 
Estimated life 
10 years 
Insurance charge 
18,000 per year 
Residual value at the end of life 
5,00,000 
General fixed expenses 
20,000 per year 
Repairs and maintenance cost 
5,000 per month 
Fuel each way for 5 km 
Rs 100 
Salary and wages of helper 
15,000 per month 


Required: (Operating cost statement):
(1) Total km and passenger km; (2) Standing charge, running charge and total cost; (3) Cost per passenger km
[Answer: Total km = 1,250; passenger km = 20,000;
(2) Standing = Rs 27,500; Running = Rs 30,000; Total = Rs 57,500;
(3) Cost per passenger km = Rs 2.88; *Depn = Rs 8,333; *Fuel = Rs 25,000;
SOLUTION
Given and working note:
Total km 
Depreciation 

= 1 bus × 5 trips × 2 ways × 5 km × 25 days 
= (PV – BSV) ÷ Life × 1/12 

= 1,250 km 
= (15,00,000 – 5,00,000) ÷ 10 years × 1/12 


= Rs 8,333 







Passenger km 
Fuel charge 

= Total km × Normal Capacity 
For 5 km 
= Rs 100 
= 1,250 km × 20 persons@80% 
For 1,250 km 
= Rs 100 × 1250 km ÷ 5 km 
= 20,000 km 

= Rs 25,000 
^{ }
Operating Cost Sheet
ABC Transport Company
(For 1 month)
Particulars 
Amount Rs 
Standing/fixed charges: 

Depreciation 
8,333 
Salary and wages of helpers 
15,000 
Taxation and renewal charge [Rs 12,000 ÷ 12 month] 
1,000 
Insurance charge [Rs 18,000 ÷ 12 month] 
1,500 
General fixed expenses [Rs 20,000 ÷ 12 month] 
1,667 
Total A 
27,500 
Running/variable charges: 

Repairs and maintenance 
5,000 
Fuel [Rs 100 × 5 tips × 2 ways × 25 days] 
25,000 
Total B 
30,000 
Total cost (A+B) 
Rs 57,500 
Total passenger km 
20,000 km 
Fare per passenger per km = Total cost ÷ Total passenger km 
Rs 2.88 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2067, Q: 7
Mr Shrestha has provided the following Particulars of his tourist car:
Cost of car Rs 5,50,000 (life 10 years and scrap value Rs 50,000)
Distance of route 40 km one way.
Insurance and taxes Rs 10,500 p.a.
Garage rent Rs 2,000 p.m.
Repair and maintenance Rs 12,000 p.a.
Driver’s salary Rs 6,000 p.m.
Other overhead charges Rs 500 p.m.
Petrol cost Rs 100 per 10 km
Car will make 4 round trips each day.
Car will operate 25 days in a month.
Profit is to be charged @ 15% on freight.
Required: (Operating cost sheet): (a) Calculation for depreciation, running km and fuel; (b) Showing proper division of cost;
(c) Profit; (d) Charge per passenger km
[Answer: (a) Dep^{n} = Rs 4,167; Running km = 8,000; Fuel cost = Rs 80,000;
(b) Standing = Rs 13,042; Running = Rs 81,500; Total = Rs 94,542;
(c) Profit = Rs 16,684; (d) Charge per km = Rs 13.90]
SOLUTION
Given and working note:
Depreciation per month 

= (PV – BSV) ÷ Life × 1/12 

= (Rs 550,000 – Rs 50,000) ÷ 10 years × 1/12 

= Rs 4,167 



Running km 

= 1 car × 40 km × 4 trips × 2 ways × 25 days 

= 8,000 km 



Petrol per month 

10 km needs 
= Rs 100 
8,000 km needs 
= 100 × 8,000 ÷ 10 

= Rs 80,000 


^{ }
Operating Cost Sheet
Of Mr Shrestha
(For one month)
Particulars . 
Amount Rs 
Standing/fixed cost: 

Insurance and tax [Rs 10,500 ÷ 12 month] 
875 
Garage rent 
2,000 
Driver’s salary 
6,000 
Depreciation 
4,167 
Total [A] 
13,042 
Running/variable cost: 

Repairs and maintenance [Rs 12,000 ÷ 12 month] 
1,000 
Other charges 
500 
Petrol 
80,000 
Total [B] 
81,500 
Total cost [A+B] 
Rs 94,542 
Add: Profit [Rs 94,542 × 15/85] 
16,684 
Net cost 
Rs 111,226 
Running km 
8,000 km 
Cost per passenger km = Rs 111,226 ÷ 8,000 km 
Rs 13.90 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2068, Q: 7
A Local Transport Company operates 8 mini buses between Ratnapark to Swoyambhu vis Kalimati (Kathmandu) which covered approximately 15 km.
The seating capacity of each mini bus is 30 passengers.
The following information was obtained from the company’s log book for the current month:
Cost of each mini bus Rs 20,00,000
Estimated life 8 years
Scrap value per mini bus Rs 80,000
Diesel, oil, grease Rs 125 per trip each way
Each mini bus is operated by 3 crew member from 6 am to 8 pm each day for the average 30 days in a month.
Wages and salary of operating crew per mini bus per month Rs 12,000
Repair and maintenance per month per bus Rs 2,000
Insurance per bus per month Rs 1,200
Depreciation per month per bus Rs 20,000
Interest and office charge per bus per month Rs 17,000
The passengers’ occupancy was 100% in each trip.
All the buses run all the days in the month making 6 round trips per day.
Required: Cost statement by showing cost per passenger per km
[Answer: (a) TC (Rs 401,600 + 376,000) = Rs 777,600;
(b) Passenger km = 12,96,000; (c) Cost per passenger per km = Re 0.60;
*Depn = Rs 160,000; Diesel = Rs 360,000]
SOLUTION:
Given and working note:
No. of trips 
Depreciation for 8 buses per month 
= 8 buses × 6 trips × 2 ways × 30 days 
= Rs 20,000 × 8 buses 
= 2,880 
= Rs 160,000 




Diesel, oil, grease 
Running km 
= 2,880 trips × Rs 125 
= 8 buses × 15 km × 6 trips × 2 ways × 30 days 
= Rs 360,000 
= 43,200 km 




Depreciation per bus per month 
Passenger km 
= (PV – BSV) ÷ Life × 1/12 
= 43,200 km × 30 passengers 
= (Rs 20,00,000 – Rs 80,000) ÷ 8 years × 1/12 month 
= 12,96,000 km 
= Rs 20,000 (given in question also) 



Operating Cost Sheet
A Local Transport Company
(For 8 buses for one month)
Particulars . 
Amount Rs 
Standing/fixed cost: 

Wages and salary (Rs 12,000 × 8) 
96,000 
Insurance (Rs 1,200 × 8) 
9,600 
Interest and office charges (Rs 17,000 × 8) 
136,000 
Depreciation 
160,000 
Total [A] 
401,600 
Running/variable cost: 

Repairs and maintenance [Rs 2,000 × 8] 
16,000 
Diesel, oil, grease 
360,000 
Total [B] 
376,000 
Total cost [A+B] 
Rs 777,600 
Passenger km 
12,96,000 km 
Cost per passenger km = Rs 777,600 ÷ 12,96,000 km 
Re 0.60 
#####
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#####
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2069, Q: 7
A taxi owner supplies the following particulars in respect of a taxi car:
Cost of taxi car Rs 800,000
Driver’s salary per month Rs 5,000
Rent of garage per month Rs 2,000
Insurance premium per year Rs 12,000
Road tax and repairs per year Rs 33,600
The life of a taxi is 200,000 km; at the end, it is estimated to be sold at Rs 200,000.
The taxi runs an average of 6,000 km per month of which 25% runs in empty.
Petrol consumption is 15 km per liter; the cost of petrol is Rs 100 per liter.
Mobil and other sundry expenses amount to Rs 20 per 100 km.
Required: (a) Operating cost statement by showing standing and running charges; (b) Effective cost of running taxi per km
[Answer: (a) Total cost (10,800 + 59,200) = Rs 70,000;
(b) Cost per passenger km = Rs 15.56; *Effective km = 4,500 km;
*Depn = Rs 18,000; Petrol = Rs 40,000; Mobil = Rs 1,200;
SOLUTION:
Given and working note:
Effective running km 
Petrol expenses 

Here, 25% empty means 75% capacity 
15 km needs 
= 1 liter 

= 6,000 km @ 75% 
6,000 km need 
= 1 × 6,000 ÷ 15 km 

= 4,500 km 

= 400 liters 


Now, 


= 400 liters × Rs 100 

Depreciation per month 
= Rs 40,000 

= (PV – BSV) ÷ Life × 6,000 km 


= (Rs 800,000 – Rs 200,000) ÷ 200,000 km × 6,000 km 


= Rs 18,000 
Mobil expenses 


For 100 km 
= Rs 20 


For 6,000 km 
= Rs 20 × 6,000 ÷ 100 



= Rs 1,200 




Operating Cost Sheet
Of A Taxi Owner
(For one month)
Particulars . 
Amount 
Standing/fixed cost: 

Driver’s salary 
5,000 
Rent 
2,000 
Insurance (Rs 12,000 ÷ 12 months) 
1,000 
Road tax and repairs (Rs 33,600 ÷ 12 months) 
2,800 
Total [A] 
10,800 
Running/variable cost: 

Depreciation 
18,000 
Petrol expenses 
40,000 
Mobil expenses 
1,200 
Total [B] 
59,200 
Total cost [A+B] 
Rs 70,000 
Effective running km 
4,500 km 
Cost per passenger km = Rs 70,000 ÷ 4,500 km 
Rs 15.56 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2071, Q: 7
A Transport Company supplies you the following information for the current month:
Cost of truck Rs 24,00,000
Salary and wages Rs 18,000
Diesel per km Rs 10
Garage rent per month Rs 2,000
Kilometer runs in a month 10,000 km
Repair and maintenance per month Rs 6,000
Insurance per year Rs 48,000
Depreciation 10% per annum
Required: (a) Statement of total cost by showing standing and running charges; (b) Cost per km run
[Answer: (a) TC = (44,000 + 106,000) = Rs 150,000; (b) Rs 15;
*Depreciation = Rs 20,000
SOLUTION:
Given and working note:
Depreciation per month
= Rs 24,00,000 × 10% × 1/12 month
= Rs 20,000
Operating Cost Sheet
Of A Transport Company
(For one month)
Particulars . 
Amount 
Standing/fixed cost: 

Salary and wages 
18,000 
Garage rent 
2,000 
Insurance (Rs 48,000 ÷ 12 months) 
4,000 
Depreciation 
20,000 
Total [A] 
44,000 
Running/variable cost: 

Repair and maintenance 
6,000 
Diesel expenses (10,000 km × Rs 10) 
100,000 
Total [B] 
106,000 
Total cost [A+B] 
Rs 150,000 
Effective running km 
10,000 km 
Cost per passenger km = Rs 106,000 ÷ 10,000 km 
Rs 15 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2072, Q: 14a
A Transport Company supplies you the following information for the month of January:
Cost of car 
Rs 20,00,000 
Kilometer runs in January 
12,000 km 
Salary and wages 
Rs 40,000 
Diesel and lubricant per km 
Rs 5 
Repairs 
Rs 7,000 
Garage rent 
Rs 10,000 
Insurance and road tax per annum 
Rs 96,000 
Depreciation per year under SLM 
15% 
Required: (a) Total cost showing standing and running changes; (b) Profit if the company charges 20% profit on the cost
[Answer: (a) TC (83,000 + 67,000) = Rs 150,000; (b) Profit = Rs 30,000;
*Depreciation = Rs 25,000]
SOLUTION:
Given and working note:
Depreciation per month
= Rs 20,00,000 × 15% × 1/12 month
= Rs 25,000
Operating Cost Sheet
Of A Transport Company
(For one month)
Particulars . 
Amount 
Standing/fixed cost: 

Salary and wages 
40,000 
Garage rent 
10,000 
Insurance (Rs 96,000 ÷ 12 months) 
8,000 
Depreciation 
25,000 
Total [A] 
83,000 
Running/variable cost: 

Repair and maintenance 
7,000 
Diesel and lubricant (12,000 km × Rs 5) 
60,000 
Total [B] 
67,000 
Total cost [A+B] 
Rs 150,000 
Add: Profit (150,000 × 20%) 
30,000 
Total fare 
Rs 150,000 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2073, Q: 14a
Suman Transport owns a truck with 10 ton capacity which carries goods between two cities having distance of 50 km.
The truck carries with full load operates one round trip each day for 20 days in a month. Other details are:
Cost of truck 
Rs 30,00,000 
Life 
10 years 
Scrap value after 10 years 
Rs 6,00,000 
Driver’s wages 
Rs 15,000 per month 
Cleaner’s wage 
Rs 2,500 per month 
Diesel, mobil oil, grease etc 
Rs 20 per km 
Garage rent 
Rs 5,000 per month 
Insurance and road tax 
Rs 6,000 per annum 
Repairs 
Rs 4,000 per month 
Required: (a) Cost per ton km by showing standing and running charges; (b) Fare to be charge per ton km if 25% profit on fare
[Answer: (a) TC (43,000 + 44,000) = Rs 87,000; (b) Fare to be charged = Rs 5.80;
*Profit per ton km = Rs 1.45; Depn = Rs 20,000; ton km (2,000 × 10) = 20,000
SOLUTION:
Given and working note:
Total running km
= 1 truck × 20 days × 1 trip × 2 ways × 50 km
= 2,000 km
Total ton km
= 2,000 ton/km × 10 ton
= 20,000 ton km
Depreciation
= (Rs 30,00,000 PV – Rs 6,00,000 Scrap) ÷ 10 years ÷ 1/12 month
= 240,000 ÷ 1/12 month
= Rs 20,000
Operating Cost Sheet
Of Suman Transport Company
(For one month)
Particulars . 
Amount 
Standing/fixed cost: 

Driver’s wages 
15,000 
Cleaner’s wages 
2,500 
Garage rent 
5,000 
Insurance (Rs 6,000 ÷ 12 months) 
500 
Depreciation 
20,000 
Total [A] 
43,000 
Running/variable cost: 

Repair and maintenance 
4,000 
Diesel and lubricant (2,000 km × Rs 20) 
40,000 
Total [B] 
44,000 
Total cost [A+B] 
Rs 87,000 
Cost per ton km (Rs 87,000 ÷ 20,000 ton km) 
Rs 4.35 
Add: Profit (Rs 4.35 × 25/75) 
Rs 1.45 
Fare to be charged 
Rs 5.80 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2075, Q: 15a
A Transport Company provides the following particulars:
Particulars 

Cost of vehicle 
Rs 40,00,000 
Estimated life 
10 years 
Estimated scrap value at the end of 10 years life 
Rs 5,00,000 
The vehicle covers in a year 
20,000 km 


Other annual expenses are: 

Garage rent 
Rs 15,000 
Road license 
Rs 20,000 
Insurance charge 
Rs 25,000 
Driver’s salary 
Rs 60,000 
Other fixed expenses 
Rs 20,000 
Fuel consumption 
10 km per liter 
Cost of fuel per liter 
Rs 90 
Required: Operating cost sheet by showing standing and running charges
[Answer: TC (250,000 + 180,000) = Rs 670,000;
Depn = Rs 350,000; Fuel = Rs 180,000]
SOLUTION:
Given and working note:
Depreciation 
Fuel cost 

= (40,00,000 PV – 500,000 Scrap) ÷ 10 years 
10 km requires 
= Rs 90 
= 35,00,000 ÷ 10 years 
20,000 km requires 
= Rs 90 × 20,000 km ÷ 10 km 
= Rs 350,000 

= Rs 180,000 
Operating Cost Sheet
Of A Transport Company
(For one year)
Particulars . 
Amount 
Standing/fixed cost: 

Garage rent 
15,000 
Road license 
20,000 
Insurance charge 
25,000 
Driver’s salary 
60,000 
Other fixed expenses 
20,000 
Depreciation 
350,000 
Total [A] 
490,000 
Running/variable cost: 

Fuel expenses 
180,000 
Total [B] 
180,000 
Total cost [A+B] 
Rs 670,000 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2077, Q: 14a
Harati Yatayat Sewa presents the following information to you:
Particulars 

Cost of bus 
Rs 660,000 
Estimated scrap value at the end of 10 years life 
Rs 60,000 


Other expenses are: 

Driver’s salary 
Rs 20,000 per month 
Helper’s salary 
Rs 10,000 per month 
Insurance and tax 
Rs 36,000 per month 
Other administrative expenses 
Rs 24,000 per month 
Diesel and lubricating cost 
Rs 20 per km 
Profit 
10% on freight 
The bus will run 25 days in a month with 6 round trips of 15 km a day.
Required: Operating cost sheet by showing standing and running charges
[Answer: TC (95,000 + 90,000) = Rs 185,000;
Depn = Rs 5,000; Diesel = Rs 90,000]
SOLUTION:
Given and working note:
Depreciation per year 
Total running km 
= (660,000 PV – 60,000 Scrap) ÷ 10 years 
= 1 bus × 25 days × 6 trip × 2 ways × 15 km 
= 600,000 ÷ 10 years 
= 4,500 km 
= Rs 60,000 



Depreciation per month 
Diesel and lubricating cost 
= Rs 60,000 × 1/12 
= 4,500 km × Rs 20 
= Rs 5,000 
= Rs 90,000 


Operating Cost Sheet
Harati Yatayat Sewa
(For one month)
Particulars . 
Amount 
Standing/fixed cost: 

Driver’s salary 
20,000 
Helper’s salary 
10,000 
Insurance and tax 
36,000 
Other administrative expenses 
24,000 
Depreciation 
5,000 
Total [A] 
95,000 
Running/variable cost: 

Diesel and lubricating cost 
90,000 
Total [B] 
90,000 
Total cost [A+B] 
Rs 185,000 
Cost per km (Rs 185,000 ÷ 4,500 km) 
Rs 41.11 
Add: Profit (Rs 41.11× 10/90) 
Rs 4.57 
Fare to be charged 
Rs 45.68 
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