Tupeleke Vans is a distribution business, operating a fleet of five vans, all of which run on lead free petrol. The practical capacity of the business is 12000 hours per year, which is equivalent to 185,500 kilometers. However a practical capacity usage is never 100%. For 60% of the capacity usage is 90%, for the remainder of the time, capacity usage is 50%. Tupeleke Vans employs five fulltime drivers.

Typical costs on annual basis are given below:

Drivers wages (per driver)	$3,834
Driver expenses (per driver including accommodation and meals) paid by the company	$3,578
Depreciation cost per vehicle	$3,284
Maintenance cost per vehicle	$714
General administrative costs	$37,760
License fee per vehicle	$140
Insurance cost per vehicle	$410
Tyres per van for every 30000 KM	$400 per set
Lead free petrol (fuel costs)	$0.40 per litre
Spares and other costs per vehicle	$20 per 1000 KM
Average kilometers per liter	4

General administrative costs are absorbed in to the cost of jobs at 20% of total costs (other than general administration costs).

Required:

• Briefly describe the cost units that are appropriate for a transport business
• Draw a graph which shows the total cost per kilometer as practical capacity usage increases from 50% to 100%. (Plot costs at 9,000 kilometer intervals).
• For a job that requires one vehicle to drive 100 kilometers, calculate the total and variable costs that would be charged to the job.