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Q. A business has 6 lorries in operation, 5 days a week for 50 weeks of the year.
Each vehicle is expected to make 4 journey a day, delivering an average load of 5 tonnes to customer. The average customer is located 25km from the transport headquarters.
Fuel and other variable running costs per kilometre travelled are budgeted to be $0.50. Other fixed running costs amount to $225,000 per annum.
What is the standard costing cost per annum per tonne kilometer?
I have tried to solve the question but is unable to answer it. Kindly help.
How should I tackle this kind of question.
Thank in advance.
The question asks for the cost per tonne/kilometre. So calculate the total tonnes x kilometres during the year ( 6 lorries x 5 days x 50 weeks x 4 journeys x 5 tonnes x 25km).
Calculate the total cost per year (225,000 + (6 lorries x 5 days x 50 weeks x 4 journeys x 25km)).
Divide the total cost by the total tonnes x kilometres, and then you have the cost per tonne/kilometre 🙂
Do watch my free lectures on this. The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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