Session 6 – Service Costing – Exercises with Solutions

Exercise 1:

The following statistical data are available regarding the money of operating two trucks by a
transport company:

Truck Truck
No.01 No.02
Drivers' Salaries Rs. 250 Rs. 275
Cleaners' Wages 150 160
Petrol 300 350
Mobile Oil 25 30
Garage Rent 125 125
Taxes & Insurance 50 50
Depreciation 560 620
Expenses of
Supervision 100 100
Repairs 120 140
Miscellaneous
Overheads 40 40

The two trucks carried 150 tonnes of goods each during the month of November 2010. The
distance covered was 3,500 kms. and 5,000 kms respectively. Prepare an operating cost sheet
for November 2010 from the above data.

Exercise 2

The Union Transport Company has been given a twenty kilometer long route to play a bus. The
bus costs the company Rs. 1, 00,000. It has been insured at 3% per annum. The annual road
tax amounts to Rs. 2,000. Garage rent is Rs. 400 per month. Annual repair is estimated to cost
Rs. 2,360 and the bus is likely to last for five years. The salary of the driver and the conductor
is Rs.600 and Rs. 200 per month respectively in addition to 10% of takings as commission to be
shared equally by them. The manager's salary is Rs.1, 400 per month and stationery will cost
Rs. 100 per month. Petrol and oil cost Rs. 50 per 100 kilometers. The bus will make three round
trips per day carrying on an average 40 passengers in each trip.

Assuming 15% profit on takings and that the bus will ply on an average 25 days in a month,
prepare operating cost statement on a full year basis and also calculate the bus fare to be
charged from each passenger per kilometer.

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Exercise 3:

A Company is into a hotel industry. It has hired a place at a rent of Rs 1,00,000 per month with
5% of total taking. It has three types of suites for its customers

Type of Suite Number Occupancy %age

Single Room 100 100%
Double Rooms 50 80%
Triple Rooms 30 60%

The rent of the double room suit is to be fixed at 2.5 times of the single room suite and that of
triple room Suite as twice as the double room suite.

The other expenses for the year 2010 are as follows:

Nature of Expense in Rs
Staff Salaries 14,25,000
Room attendants wages 4,50,000
Lighting, heating and power 2,15,000
Repairs and renovation 1,23,500
Laundry Charges 80,500
Interior decoration 74,000
Sundries 1,53,000

Provide profit at 20% on total taking and assume 360 days in a year. You are required to
calculate the rent to be charged for each type of suit.