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Lastly, Don is concerned about a professional development training trip to a nearby city that is scheduled for an upcoming Saturday. The associate superintendent solicited

Lastly, Don is concerned about a professional development training trip to a nearby city that is scheduled for an upcoming Saturday. The associate superintendent solicited a bid for the trip from Acme Bus Company and it came in at half the cost of using the school division buses; details have been included in Appendix III. Don doesn't think this makes sense and would like your advice on if there is a better way to charge for bus use between departments that benefits MSD overall.

Appendix III

Bus service costs for upcoming training trip

Buses will leave the schools at 8:00 a.m. and return by 6:00 p.m. The actual driving time is three hours each way and the total distance driven will be 300 km.

Bid from Acme Bus Company:

$645 per bus [$1.55/km + $180 per day for the driver ($18 per hour for 10 hours)].

Transfer price from administration department:

$1,290 per bus (300 km at $4.30/km). On average, buses operate for three hours per day.

The $4.30/km rate is based on the following budgetary data:

Garage (Note 1)

$166,000

Fuel (Note 2)

216,000

Tires (Note 3)

55,000

Annual insurance

96,750

Drivers (Note 4)

270,000

Bus lease (Note 5)

540,000

Total

$1,343,750

Annual kilometres in service

312,500

Cost per kilometre

$4.30

Notes:

1. The base facility costs $40,000 per year + $14 per bus per day to cover minor repairs, cleanup, and a visual safety inspection (that is, 200 school days 45 buses $14 = $126,000).

2. Buses use an average of $8 of fuel per operating hour (3 hours per day 45 buses 200 days $8 = $216,000).

3. Pursuant to government regulations, bus tires are changed annually.

4. Drivers are paid $20 per hour for regular driving time (double for weekends) and $10 per hour (any day) for waiting.

5. Buses are leased at $12,000 each per year. This amount covers major maintenance.

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