You are the transport manager of TransLog Carriers which operates a fleet of several combination vehicles. One of these vehicles is a 4x2 rigid and a two axle drawbar trailer that covers 50000 km per annum.Use the assumptions below to determine the following (show all calculations):

1.1.Calculate the annual total vehicle costs (TVC). (15 marks)

1.2.What will the TVC per annum be at an annual travel distance of 40000 km and 60000 km respectively? What do you observe of the total vehicle cost per km? (5 marks)

Assumption:

Overheads - Administration

R 101 295

Cost of capital (% of purchase price per annum)

10.50%

Annual License Fees

R 12 200

Driver Monthly cost

R 27 750

Assistant Monthly cost

R 10 600

Purchase price - Rigid

R 856 000

Overheads - Operations

R 67 500

Depreciation - straight line method

Rigid residual value

25%

Rigid economic life (years)

5

Purchase price - Trailer

R 440 000

Tyre usageand cost (c/km)

135

Trailer residual value

0%

Trailer economic life (years)

10

Fuel consumption (liter /100km)

47

Fuel price (c/liter)

1153

Insurance (% of cost price)

7%

Maintenance cost (c/km)

361

Distance travelled per annum (km)

50000

Rigid (tyres)

6

Drawbar-trailer (tyres)

8

New tyre price (each)

R 15 900

Lubricants (% of fuel cost)

2.5%

Working weeks

50

Working days

5 days / week