Beruflich Dokumente
Kultur Dokumente
Operating Costing
Learning Objectives
When you have finished studying this chapter, you should be able to
Supply service
Hospital
Patient per day, room per day or per bed, per operation etc.
Canteen
Cinema
Per ticket.
Composite units i.e. tonnes kms., quintal kms. etc. may be computed in two ways.
(i)
(ii)
Operating Costing
8.2
(i)
Absolute (weighted average) tonnes-kms. Absolute tonnes-kms., are the sum total of
tonnes-kms., arrived at by multiplying various distances by respective load quantities
carried.
(ii)
20 + 12 + 16
2.
3.
Note : In the absence of information about semi-variable costs, the costs may be shown under
two heads only, i.e., fixed and variable.
Under operating costing, the per unit cost of service may be calculated by dividing the total
cost for the period by the total units of service in the period.
Treatment of depreciation and interest - Depreciation if related to effluxion of time, may be
treated as fixed. If it is related to the activity level, it may be treated as variable.
8.3
Cost Accounting
Bus No. :
Carrying capacity : 40
A.
B.
C.
1
Standing Charges
Depreciation (9,00,000 60,000) 5
Tax
Insurance
Stationery
Managers salary
Total
Maintenance charges
Garage rent
Repairs
Total
Operating or running charges
Diesel and oil
` 450
x 36,000kms
100kms
Drivers salary
Conductors salary
Total
Grand Total (A+B+C)
Loading @ 25/75
Fare per 100 passenger-km.
Per annum
(`)
2
Per 100
passenger km.
(`)
3
1,68,000
10,000
27,000
6,000
42,000
2,53,000
_____
17.57
1,20,000
10,000
1,30,000
_____
9.03
1,62,000
18,000
12,000
1,92,000
_____
13.33
39.93
13.31
53.24
Operating Costing
8.4
Notes :
(1)
: 3 2 20 kms 25 days
= 3,000 kms
`450
100
(2)
: 3,000
(3)
per annum
(4)
=` 13,500 p.m.
Loading - If taking is ` 100, 10 will have to be given as commission and 15 must remain
as profit; the cost must therefore be 75. On 75 the loading must be 25 to make the taking
equal to 100.
8.5
Cost Accounting
Prepare a statement showing the expenses of operating a single bus and the fleet of five
buses for a year.
(ii)
Work out the average cost per student per month in respect of
(A) students coming from a distance of upto 4 kms. from the school and
(B) students coming from a distance beyond 4 kms. from the school.
Solution
(i)
Particulars
Rate
(`)
Total :
Cost per month
(ii) No. of students on half fare basis
(See note 2)
(A) Cost per student (half fare)
(B) Cost per student (full fare)
Per Bus
Per annum
No.
(`)
1
1/5
54,000
8,400
8,600
10,000
1,00,000
No.
(`)
5
1
2,70,000
42,000
43,000
50,000
5,00,000
35,000
1,75,000
1,62,000
3,78,000
31,500
8,10,000
18,90,000
1,57,500
150
` 210.00
` 420.00
750
` 210.00
` 420.00
Working Notes :
1.
Fleet of 5
buses p.a.
Operating Costing
8.6
2.
Illustration 4 (Computation of cost per absolute ton-kilometer and profit for the month)
Global Transport Ltd. charges ` 90 per ton for its 6-tons truck lorry load from city A to city B.
The charges for the return journey are ` 84 per ton. No concession or reduction in these rates
is made for any delivery of goods at intermediate station C. In January 2012, the truck made
12 outward journeys for city B with full load out of which 2 tons were unloaded twice in the
way at city C. The truck carried a load of 8 tons in its return journey for 5 times but was once
caught by police and ` 1,200 was paid as fine. For the remaining trips the truck carried full
load out of which all the goods on load were unloaded once at city C, but it returned without
any load once only from C station to A station. The distance from city A to city C and city
B are 140 kms. and 300 kms. respectively.
Annual fixed costs and maintenance charges are ` 60,000 and ` 12,000 respectively. Running
charges spent during January 2012 are ` 2,944.
You are required to find out the cost per absolute ton-kilometre and the profit for January, 2012.
Solution
Statement showing the Operating Cost per ton-km. and Profit for January, 2012.
(`)
(i)
(ii)
Standing Charges:
Fixed charges
Maintenance Charges:
60,000
(`)
8.7
Cost Accounting
Maintenance cost
(iii)
12,000
72,000
6,000
2,944
8,944
Statement of Profit
Receipts (Refer to working note- 4)
Less: Monthly running cost
Fine paid to police
Profit
(`)
8,944
1,200
(`)
13,368
10,144
3,224
Working Notes
1. Outward journeys:
(i) From city A to city B: 10 journey 300 kms 6 tons
= 18,000 tons kms
(ii) From city A to city C: 2 journeys 140 kms 6 tons
= 1,680 tons kms.
(iii) From city C to city B: 2 journeys 160 kms 4 tons
= 1,280 tons kms
Total
20,960 tons kms
2. Return journeys:
(i) From city B to city A: 5 journeys 300 kms 8 tons.
= 12,000 tons kms
6 journeys 300 kms 6 tons
= 10,800 tons kms
(ii) From city B to city C:1 journey 160 kms. 6 tons
= 960 tons kms.
Total
23,760 tons kms
3. Total absolute tonnes kms of outward and return journeys:
(Refer to working notes 1 and 2) = 20,960 tons kms + 23,760 tons km
= 44,720 tons, - kms.
4. Net revenue received during January, 2012:
12 trucks 6 tons ` 90
= ` 6,480
(from city A to city B)
5 trucks 8 tons ` 84
= ` 3,360
(from city B to city A)
6 trucks 6 tons ` 84
= ` 3,024
(from city B to city A)
1 truck 6 tons ` 84
= ` 504
(from city B to city C)
Total revenue
= ` 13,368
Operating Costing
8.8
Comments:
(i)
Transporters often carry overloads, which attract fines and penalties. In this question
absolute cost per ton-kilometre is required. This can be arrived at by considering both the
entire receipts from the overloading as well as fines paid.
(ii) Normally fines will not form part of cost. It is to be debited to profit and loss account
directly.
Illustration 5 (Calculation of fare to be charged from passengers from different routes)
Mr. X owns a bus which runs according to the following schedule:
(i)
` 6,00,000
` 2,800 p.m.
` 2,200 p.m.
` 200 p.m.
` 4,800 p.a.
` 46 per litre
` 1,500 p.a.
` 10 per 100 kms.
` 315 p.m.
` 1,000 p.m.
@ 20% p.a.
50 persons.
Passenger tax is 20% of the total takings. Calculate the bus fare to be charged from each
passenger to earn a profit of 30% on total takings. The fares are to be indicated per
passenger for the journeys:
8.9
Cost Accounting
Students are expected to work out the fare to be charged per passenger for different journeys.
Before the same is found out, it is necessary to find out the preliminary data, i.e. kms. per
month and passenger km. per month.
Total kms. covered per month
Bus route
Delhi to Chandigarh
Delhi to Agra
Delhi to Jaipur
250
210
270
2
2
2
8
10
6
Km. per
month
4,000
4,200
3,240
11,440
Capacity utilised
Seats
90
85
100
720
850
600
Km. per
trip
Passenger
Km. per
month
250
210
270
1,80,000
1,78,500
1,62,000
5,20,500
= 800 seats
= 1,000 seats
= 600 seats
Variable Costs
(i) Running Costs:
Diesel [(11,440 km 4 km) ` 46]
Lubricant oil [(11,440 km 100) ` 10]
(ii) Maintenance Costs:
Repairs & Maintenance
(`)
(`)
1,31,560
1144
1,32,704
1,000
Operating Costing
(iii) Standing charges:
Salary of driver
2,800
Salary of conductor
2,200
Salary of part-time accountant
200
Insurance (` 4,800 12)
400
Road tax (` 1,500 12)
125
Permit fee
315
10,000
Depreciation (` 6,00,000 20%) 12
Total costs per month (i)+(ii)+(iii)
Profit and Passenger tax @ 100% of cost (Note below)
Total takings per month
Passenger km. per month
Rate per passenger km. = (` 2,99,488 5,20,500) = ` 0.575 say ` 0.58
8.10
16,040
1,49,744
1,49,744
2,99,488
5,20,500
=
=
=
` 0.58 250 km
` 0.58 210 km
` 0.58 270 km
=
=
=
` 145.00
` 121.80
` 156.60
Note:
1. Passenger tax
2. Profit
3. Passenger tax + Profit
4. Cost (balance)
5. Total takings
6. Item 3 as a % of item 4
Passenger tax (20% of ` 2,99,488)
Profit (30% of ` 2,99,488)
=
=
=
=
=
=
=
=
Purchase and maintain its own fleet of cars. The average cost of a car is ` 1,00,000.
Allow the Executive use his own car and reimburse expenses at the rate of ` 1.60 per
kilometer and also bear insurance costs.
(iii) Hire cars from an agency at ` 20,000 per year per car. The company will have to bear
costs of petrol, taxes and tyres.
8.11
Cost Accounting
Taxes ` 800 per car per annum Life of the car: 5 years with annual mileage of 20,000 kms.
Resale value: ` 20,000 at the end of the fifth year.
Work out the relative costs of three proposals and rank them.
Solution
Alternative Proposals
I
Use of companys car
` per annum
Reimbursement (A)
Fixed cost: (B)
Per car per annum
Insurance
Taxes
Depreciation
(` 1,00,000 20,000)/5
Total
Fixed cost per km
(` 18,000 20,000 km.)
Running and Maintenance
Cost (C)
Per car per km.
Petrol
Repairs and Maintenance
Tyre
Total cost per km. (A+B+C)
Cost for 20,000 km.
Ranking of alternative
proposals
II
Use of own
car
` per km.
1.60
III
Use of
hired car
` per km.
1.00@
0.06*
0.04**
0.60
0.20
0.12
1.82
` 36,400
1.66
` 33,200
0.60
0.12
1.76
` 35,200
III
II
` per km.
1,200
800
16,000
18,000
0.90
Operating Costing
8.12
Decision: The Second alternative i.e., use of own car, is the best alternative from companys
point of view. Third alternative, i.e. hiring cars from outside agency is the second best
alternative. First alternative, i.e. maintaining the fleet is the costliest alternative.
20,000/20,000Kms = `1
10,00,000 k.w.h.
(`)
50,000
50,000
40,000
30,000
20,000
Coal consumed per k.w.h. for the year is 2.5 k.g. @ `0.02 per kg. Depreciation charges @ 5%
on capital cost of ` 2,00,000.
Solution
Cost Statement of Chambal Thermal Power Station
Fixed costs :
Plant supervision
Administration overheads
Depreciation (5% of ` 2,00,000 p.a.)
Total fixed cost: (A)
Variable costs
Operating labour
Lubricating, spares & stores
Repairs & maintenance
Coal cost (Refer to working note)
Total variable cost: (B)
Total cost [(A) + (B)]
10,00,000 k.w.h.
Per annum
(`)
Per k.w.h.
(`)
30,000
20,000
10,000
60,000
0.06
50,000
40,000
50,000
50,000
1,90,000
2,50,000
0.05
0.04
0.05
0.05
0.25
8.13
Cost Accounting
Working Note:
= ` 50,000
Standard Load - An alternative unit for the distribution of transport cost is the standard load.
Where the goods to be transported are of varying bulk and weight, the calculation of actual
number of tonne-kilometres is not an easy matter. For example, if a business delivers its own
products by its own transport, the cost per tonne-kilometres may be most misleading, for an
article may have a bulk which is twice that of the other, though of the same weight. In such a
case standard load is selected as the unit, i.e., the load which a lorry would carry. This would
have reference both to bulk and weight and would give an efficient method for distributing the
cost of transport over different departments. Thus, if the turnover of various departments is
reduced to standard load by first calculating their weight and then the bulk of article
produced, the costs of distributing the product would be easily ascertained.
This principle also can be extended for associating cost with convenient units of service
rendered by an organisation so that management is able to judge whether the organisation is
running efficiently and in the manner in which the service requires to be improved or be made
more economical. The cost of generation of electricity on the same principle is correlated with
units generated and also with units sold; in hospitals the cost of their maintenance is corelated to units of available bed-days.
8.4 Summary
Operating Costing:-Use those undertaking which provide services rather than production
in commodities.
Cost units used in the following services undertaken as below:Transport service
Supply service
Hospital
Patient per day, room per day or per bed, per operation etc.
Canteen
Cinema
Per ticket.