BMSCCM COSTING METHODS AND TECHNIQUES

UNIT 3
SERVICE COSTING
1. From the following information calculate (a) Total Kms (b) Total passenger per km
Number of buses – 4
Days operated in a month – 30 days
Trips made by each bust to a distance of 100 kms from one side
Capacity of each bus – 40 passengers
Average passenger travelling – 75% of capacity

2. From the following information calculate kilometres and total passengers.

Number of buses – 4
Days operated in a month – 30 days
Trips made by each bus – 4
Distance of route – 30 kms long (one way)
Capacity of each bus – 60 passengers
Normal passenger travelling – 80% of the capacity

3. Kumar transport limited is running four buses between two towns which are fifty miles apart. Seating
capacity of each bus is 40 passengers. Actual passengers carried were 75% of the seating capacity.
All the four buses ran on 25 days in the month. Each bus made one round trip per day. Calculate the
total passenger kms. Covered during the month.

4. A transport company is running 5 buses between two cities which are 40 kms apart, seating capacity
of each bus is 50 passengers, actual passengers carried were 80% of the seating capacity. Each bus
made one round trip per day (assume it to be a return trip). All the buses run on all day of the month.
Find the total passenger kms covered during the month of November 2021.

5. A transport company is running 5 buses between two cities which are 60 kms apart. Seating capacity
of each bus is 40 passengers. Actual passengers carried were 75% of the seating capacity. Each bus
made one round trip per day. All the buses run on all the days on the month. Find the total passengers
kms covered during the month of September 2021.

6. From the following data calculate the cost per km of a vehicle:

Value of vehicle Rs.30,000; road license p.a. Rs.1,000; driver’s wages p.m. Rs.400; garage rent p.a.
Rs.1,200; Insurance p.a. Rs.200; cost of petrol per litre Rs.6; kms per litre Rs.10; proportionate charges
of tyres per k.m. Re.0.50; estimated life Rs.1,50,000 kms; estimated annual kms 6,000.

7. Following details are extracted from Royal Tourist Service. Calculate cost per passenger km of a bus.
The bus runs between 2 points at a distance of 15 kms. It is not on the road for 5 days a month, on an
average. It runs 5 upward and 5 downward journey per day. Its capacity is 50 persons and on an
average 80% is full.
The expenses are as follows:
Driver’s salary – Rs.300 per month
Conductor’s and cleaner’s salary – Rs.500 per month
Fuel charges – Rs.3,500 per month
Cost of vehicle – 80,000
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Insurance and taxes p.a. – 3,000

Repairs and renewals p.a. – 4,000
Estimated life – 5 years

8. A Transport Company operates two trucks. The following is a data regarding the monthly cost of
operating them.
Particulars A B
Drivers’ salaries 250 275
Cleaners’ wages 150 160
Petrol 300 350
Mobile oil 25 30
Garage rent 125 125
Taxes and insurance 50 50
Depreciation 560 620
Expenses of supervision 100 100
Repairs 120 140
Overheads 40 40

The two trucks carried 150 tons of goods each during the month of November 2021. The distance
covered were a 3500 kms & B - 5000 kms respectively. Prepare an operating cost sheet for November
2021.
9. Workout in an appropriate cost sheet and find the unit cost i.e. per passenger kilometre, for the year
2021 iPhone 2022 come for a fleet of passenger buses run by a Transport Company. The following
information is extracted from its book
a. 5 passenger buses of Rs. 50,000; Rs.1,20,000; 45,000; 55,000 and 80,000 respectively
b. yearly depreciation on vehicle20% of cost
c. Annual repair charges, maintenance and spare parts 80% of depreciation
d. We just off 10 drivers at Rs.100 per month
e. Wages of 20 cleaners at rupees 50 per month
f. Directors fees 400 per month
g. Office establishment 1000 per month
h. Licence and taxes at 1000 per month
i. Realisation by sale of old tyres and tubes 3200 for every six months
j. Yearly rate of interest is 4% on capital
k. Diesel expense per annum is 20,000
l. 900 passengers were carried over 1600 kilometres during the year
m. Rent of six garages at rupees 50 each per month

10. Mr.V has given a permit to run a business between two towns which are 25 kilometres apart. From the
following information, assuming 10% profit on takings for Mr V, workout the bus fare to be charged
in between these two towns for each passenger.
a. Cost of bus 1,20,000
b. Tyres and tubes per month 300
c. Oil and stores 200 per month
d. Repairs estimated 450 per month
e. Salary of conductor 300 per month
f. Salary of accountant 500 per month
 BMSCCM COSTING METHODS AND TECHNIQUES

g. Miscellaneous expenses 800 per month

h. Annual tax 2400 per annum
i. Diesel for 100 kilometres ₹72
j. Garage rent ₹200 per month
k. Insurance ₹3600 per annum
l. Salary of driver ₹450 per month
m. Permit fees ₹100 per month
n. Depreciation at 25% per annum
Commission to driver and conductor is at 10% of the takings. The bus will make three round trips
every day and it carries 30 passengers on an average, in each trip. The bus will operate for 25 days
during the month
11. M.S owns a bus, which runs between Mysore and Bangalore and back for 10 days in a month. The
distance from Mysore to Bangalore is 150 kilometres. The bus completes the trip from Mysore to
Bangalore and back on the same day.
The bus goes another 10 days in a month towards Hassan. The distance from Mysore to Hassan is 120
kilometres. The trip is also completed on the same day. For the rest four days of its operation in a
month, it runs in the local city. Daily distance covered in local city is 40 kilometres.
Calculate the rate, Mr as should charge from passengers, when he wants to earn the profit of 33.33%
of his takings
The other in formation are
Cost of bus 3,00,000
Depreciation 20% per annum
Salary of driver 1750 per month
Salary of conductor 1750 per month
Salary of Clark 800 per month
Insurance 8400 per annum
Diesel consumption 8 kilometres per litre
Cost of diesel 10 per litre
Token tax 3000 per annum
Lubricating oil 50 for 100 kilometres
Repairs and maintenance 3000 per month
Permit fees 1420 per month
Normal capacity is 50 passengers. The bus is generally occupied for 90% of the capacity when it goes
to Bangalore and 80% when it goes to Hassan and 100% in the local trip

12. From the following data relating to 2 different vehicle A & B. Compute the cost per running km.
Particulars A B
Kms run (p.a) 30,000 12,000
Cost of vehicle 6,50,000 3,00,000
Road license (p.a.) 1,500 1,500
Insurance (p.a.) 1,400 800
Garage rent (p.a.) 1,200 1,000
Supervision & salaries (p.a.) 2,400 2,400
Driver’s wages per hour 8 8
Cost of fuel per litre 28 28
Kms run per ltr 10 7
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Repairs & maintenance per km 0.65 2

Tyre allocation per km 0.75 0.55
Estimated life of vehicle (kms) 1,00,000 75,000
Charge interest at 6% p.a. on cost of vehicle
The vehicles urn 16 kms/hr, on an average

13. Sajib transport company supplies the following details, with respect to a truck of 5 ton capacity.
Cost of truck – Rs.9,00,000
Estimated life – 10 years
Diesel, oil & grease – Rs.150 per trip each way
Repairs & maintenance – Rs.5,000 per month
Driver’s wages – Rs.5,000 per month
Cleaner’s wages – Rs.2,500 per month
Insurance – Rs.48,000 p.a.
Tax – Rs.24,000 p.a.
General supervision charges – Rs.48,000 p.a.
The truck carries goods to and from city, covering a distance of 50 kms each way. While going to the
city, freight is available, to the extent of full capacity and on return, 20% of capacity.
Assuming that, the truck runs on an average, 25 days a month, workout the:
a) Operating cost/ton kms
b) Rate/ton/trip, that the company should charge, if profit of 50% on freightage is to be earned.

14. Adarsha Transport Company supplied the following details in respect of a truck of 5 tonne capacity.
Cost of truck Rs.9,00,000
Scrap value Rs.45,000
Estimated life 10 years
Diesel, oil & grease Rs.750 per trip each way
Repair & maintenance Rs.5,000 per month
Driver wages Rs.5,000 per month
Cleaner wages Rs.2,000 per month
Insurance 12,000 per annum
Tax Rs.24,000 per year
General supervision charges Rs.12,000 per year. The truck carries goods to and from the city covering
a distance of 50 km each way. On outward trip freight is available to the extent of full capacity and
on return 40% of capacity. Assuming that truck runs on an average 25 days a month. Calculate:
a) Operating cost per tonne km
b) Rate per tonne per trip that company should charge if a profit of 50% on freightage is to be
earned.

15. A person owns a bus which runs between Bangalore to Mysore and back for 10 days in a month. The
distance from Bangalore to Mysore is 140 kms. The bus complete the trip from Bangalore to Mysore
and back in the same day. The bus goes another 10 days in a month to Chitradurga. The distance
between Bangalore to Chitradurga is 200 kms. The trip is also completes in the same day. For the rest
4 days of its operation in a month it runs in the local city. Daily distance covered in the local city is
60 kms.
Calculate the rate the person should charge the passenger when he wants to earn the profit of 25% of
his takings. The other information’s are given below.
 BMSCCM COSTING METHODS AND TECHNIQUES

Cost of the bus – 6,00,000

Depreciation – 15% p.m
Salary of drivers Rs.4,000 per month
Salary of conductors Rs.3,000 per month
Salary of accountant Rs.1,800 per month
Insurance Rs.12,000 p.a.
Diesel consumption 5 km per ltr costing Rs.38 per ltr
Token tax 2,500 p.m
Lubricant oil Rs.10 for 50 km
Repairs & maintenance Rs.5,000 per month
Permit fees Rs.3,800 per 6 months
Normal capacity 50 persons
The bus is generally occupied 80% of its capacity when it goes to Mysore and 90% when its goes to
Chitradurga. It is normally 100% when it runs within the city.

16. Pranav transport runs a minibus with a capacity of 25 seats. The bus runs between two places which
is 25 kms apart.
It runs for 30 days in a month and on an average 80% of seating capacity is utilised. The bus makes
two round trips each day
Cost of the bus 30,00,000
Estimated scrap value at the end of its useful life of 10 years 1,20,000
Driver’s salary per month 18,000
Conductor’s salary per month 15,000
Manager’s salary per month 12,000
Cleaner’s salary per month 9,000
Garage rent p.a. 64,800
Life tax 1,44,000
Rent, lighting etc. per month 3,000
Repairs per month 7,200
Diesel, oil etc per month 72,000
The profit expected 20% of takings
Prepare statements to show
a) Operating cost per passenger kilometer
b) The fare per passenger kilometer

Hospital costing

A Hospital runs an Intensive Care Units in a hired building at the rent of 7,500 p.m. The Hospital has
undertaken to bear the cost of repairs and maintenance.
The Intensive Care Unit consists of 35 beds and 5 more beds can be conveniently accommodated
whenever required. The permanent staff attached to the unit is as follow:
2 Supervisors, each at a salary of Rs.2,500 p.m .
4 Nurses each at a salary of Rs.2,000 p.m.
4 Ward boys each at a salary of Rs.500 p.m
Though the unit was open for the patients all the 365 days in a year but it was found that only 150 days
in a year, the unit has the full capacity of 35 patients per day and for another 80 days it had on an
BMSCCM COSTING METHODS AND TECHNIQUES

average 25 beds only occupied per day. But there were occasions when the beds were full, extra beds
were hired from outside at a charge of 10 per bed per day. This did not come to more than 5 beds extra
above the normal capacity any one day. The total hire charges for the extra beds incurred for the whole
year amounted to ₹ 7,500.
The unit engaged expert doctors from outside to attend on the patients and fees were paid on the basis
of the number of patients attended and time spent by them on an average worked out to 25,000 per
month in the year 2016.
The other expenses for the year were as under
Repairs and maintenance (Fixed) – 8,100
Food supplied to patient (Variable) – 88,000
Janitor and others services for patient (variable) – 3,000
Laundry charge for their bed linen (variable) – 60,000
Medicines supplies (variable) – 75,000
Cost of oxygen, X-ray etc., directly borne for treatment of patients (fixed) – 1,08,000
General administration charges allocated to the unit (fixed) – 10,000
Calculate the profit per patient day made by the unit in the year 2016 if the unit recovered on the overall
amount of 200 per day on an average from each patient.
The units want to work on a budget for the year 2017, but the number of patients requiring intensive
care is a very uncertain
Assuming that same revenue and expenses prevail in 2017 in the first instance, work out the number
of patient's days required by the unit to break-even.
BMSCCM COSTING METHODS AND TECHNIQUES

Previous year questions

1. 2016, section B

2. 2016, Section C

3. 2017, Section B
BMSCCM COSTING METHODS AND TECHNIQUES

4. 2017, Section C

5. 2018, Section B
BMSCCM COSTING METHODS AND TECHNIQUES

6. 2018, Section C

7. 2019, Section B
BMSCCM COSTING METHODS AND TECHNIQUES

8. 2019. Section