the car when it is not in use. The annual repair costs are estimated at 8,000. The car is estimated to have a life of 10 years, at the end of which the scrap value is likely to be 350,000 He hires a driver who is to be paid 26,000 per month and 10 per cent of the takings as commission. Other incidental expenses are estimated at 2,000 per month. Diesel and oil cost 500 per 100 kms. The car will make 4 round trips every day. Assuming that a profit of 15 per cent on takings is desired and that the car will be on the road for 25 days on an aver- age per month, what should Shankar charge per round trip Total amount Operating Cost Statement showing Determination of Charges per Round Trip Particulars (0) Standing charges per month Insurance R9,000 + 12) Taxes (2.400 + 12) Garage Charges Driver's salary Incidental expenses 3750 200 500 6.000 1.300 8.750 () Running charges per month 1 Repairs cost (R8,000 + 12) Diesel and oil (20 kms x 2 x 4 round trips x 25 days x 5 per km) Depreciation (3,00,000 - 50.000) + 120 months 666.67 20,000.00 2.083.33 22.750 31.500 4.200 6.300 (III) Total operating cost ( + ii) excluding commission (lv) Driver's commission (see working notes) (V) Desired profit (see working notes) (VI) Total charges per 100 trips (25 days X 4 round trips) (vii) Charges per round trip (242,000 + 100) 42.000 420 WORKING NOTES 1. Determination of takings per month Let 'X' be the sum of total takings per month Driver's commission is 10% of X = 0.10 X Desired profit 15% of X = 0.15 X j27 Total takings per month = Total cost + Driver's commission + Desired profit X = 31,500+ 0.10 X + 0.15 X X-0.10- 0.15 X = 31,500, or, 0.75 X = 31,500 X = 42,000 i.e. (31,500/0.75) 2. Driver's commission = 0.10 x 42,000 = 34,200 3. Desired profit = 0.15 X 42,000 = 6,300 P 13.14 From the following data relating to two different vehicles A and B, compute the cost running kilometer: Particulars B Kilometers run (annual) ) 15,000 6.000 Cost of vehicles *5,00,000 3,00,000 Road license (annual) 9,250 8.000 Insurance (annual) 7.000 4.000 Garage rent (annual) 6,000 5.000 Driver wages per hour 20 20 Cost of diesel per litre 40 40 Kilometers run per litre 20 15 Repair charges per kilometer 1.65 2.00 Tyre cost per kilometer 2.00 2.00 Estimated life of the vehicle (kilometers) 1,00,000 75.000 Vehicle run per hour (kilometers) 20 20