Problem 11 Mr. Karl Anderson has started transport business with a fleet of 10 taxies. The various expenses incurred by him are given below: (i) Cost of each taxi $75,000 (ii) Salary of office Staff $1,500 p.m. (iii) Salary of Garage's Supervisor $2,000 p.m. (iv) Rent of Garage $1,000 p.m (v) Drivers Salary (per taxi) $400 pm. (vi) Road Tax and Repairs per taxi $2,160 p.a. (vii) Insurance premium @ 4% of cost p.a. The life of a taxi is 3,00,000 km. and at the end of which it is estimated to be sold at $15,000. A taxi runs on an average 4,000 Km. per month of which 20% it runs empty, petrol consumption 9 Km. per litre of petrol costing $6.30 per litre. Oil and other sundry expenses amount to $10 per 100 Km. Calculate the effective cost of running a taxi per kilometre. If the hire charge is $1.80 per kilometre, find out the profit that Mr.Karl may expect to make in the first year of operation