From the following data relating to two vehicles X and Y, you are required to compute the cost per…


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From the following data relating to two vehicles X and Y, you are required to compute the cost per running km: Vehicle X Vehicle Y Km run (annual) 10,000 6,000 Cost of vehicle Rs. 1,00,000 Rs. 80,000 Road licence (annual) Rs. 1,000 Rs. 1,000 Insurance (annual) Rs. 800 Rs. 600 Garage rent (annual) Rs. 700 Rs. 400 Supervision salary Rs. 2,000 Rs. 2,000 Driver’s wages per hour Rs. 6 Rs. 6 Cost of fuel per hour 6 6 Km run per litre 20 km 15 km Repairs and maintenance per km Rs. 2.00 Rs. 2.50 Tyre allocation per km Rs. 1.00 Rs. 0.80 Estimated life of vehicles 1,00,000 km 80,000 km Charge interest@5 per cent p.a. on cost of vehicles. The vehicles run 20 km on an average. Statement of Cost per Running km Particulars Vehicle X Rs. Vehicle Y Rs. Step A: Fixed Costs per annum: (i) Road licence 1,000 1,000 (ii) Garage rent 700 400 (iii) Insurance 800 600 (iv) Supervision salary 2,000 2,000 (v) Interest @ 5% p.a. 5,000 4,000 (vi) Total fixed costs per annum 9,500 8,000 (vii) Kilometres run per annum 10,000 6,000 Fixed cost per km (vi ÷ vii) 0.95 1.33 Step B: Running cost per km: (i) Driver’s wages (Rs. 6 per hour for 20 km Rs. 6 20) 0.30 0.30 (ii) Fuel cost per km 0.30 0.40 (iii) Repairs and maintenance 2.00 2.50 (iv) Tyre allocation 1.00 0.80 (v) Depreciation (cost ÷ estimated life) 1.00 1.00 Total running cost per km 4.60 3.00 Step C: (A + B) Total cost per running km 5.55 4.33

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