51.000 6.8 15.000 2.0 Total (B) Running charges Depreciation (18,00,000 + (12 X 10) Diesel, oil, grease (1,200 x 50 trips that is, 2 trips daily for 25 days) Repairs and maintenance Total (C) Total cost per tonne-km (A+B) 60,000 30,000 1,05,000 1,56,000 8.0 40 14.0 20.8 WORKING NOTES 0) Determination of tonne-km per month: Trip to city: 50 kms x 5 tonnes capacity X 25 days Return back from city: 50 kms x 25 days x 1 tonne 6.250 1.250 7,500 (1) Determination of freight rate: Cost per tonne Add desired profit 100 per cent of cost Freight rate per tonne km (II) Quotation price: Freight tonne-km in both trips (250 + 50) Multiplied by freight rate per tonne- km 20.8 20.8 41.6 j26 300 41.6 12,480 P. 13.12 A cement manufacturing company is facing the problem of transportation of limestone from its quarry. The quarry is situated 25 kms away and the only means of transport available is the roadways. The company has received quotations from some of the local transporters at 325, 340 and 350 per tonne of limestone transported, with an escalation clause in respect of diesel oil costs. The quantity of limestone to be transported per month is 24.000 tonnes. While examining the feasibility of departmental transport the following facts come to be recgonised. 1. Two types of trucks are available in the market, namely, 10-tonners and 8-tonners. 2. Details of operating costs for the trucks are: 8-tonners $20,00,000 Purchase price Estimated useful life (years) Residual value Km per litre of diesel (kms) Estimated repairs and maintenance cost per truck per month Vehicle and road tax per quarter 10-tonners 25,00.000 5 4,00,000 3 2.00.000 4 20,000 6.000 16.000 6.000 3. Cost of diesel per litre, 45. 4. Cost of finance for purchase of trucks, 12 per cent per annum. 5. Each vehicle can run 5 trips (up and down) each day and can run on an average 24 days each month. 6. Drivers will have to be recruited according to the number of trucks to be purchased. In ad- dition, one extra driver for every 5 vehicles will be required for the entire fleet. Each driver will cost 8,000 per month 7. An additional transport supervisor would be required at a cost of 15,000 per month Yet another possibility to hire sufficient number trucks (10-tonners only) from a transport company at the rate of 350,000 per month per truck. The transport company bears repair and maintenance costs as well as the vehicle and road tax. The cement company has to bear the cost of drivers, supervisor and other operational costs. You are required to advise the company on an appropriate choice among the above alternatives, considering also the option of entrusting the job to the transport operators