Bus Routes

Case Study Presentation

Presented to
Abdul Rahim Suriya
FCA,FCMA
Fare for Different Bus Routes
Mr. X owns a bus which runs on following schedules:
1. Delhi to Chandigarh and back the same day
Discount Covered : 150kms. One way
Num of days run each month : 8
Seating capacity required : 90%

2. Delhi to Agra and back the same day

Discount Covered : 120kms. One way
Num of days run each month : 10
Seating capacity required : 85%

3-Delhi to Jaipur and back the same day

Discount Covered : 270kms. One way
Num of days run each month : 6
Seating capacity required : 100
Fare for Different Bus Routes (Continue)
4. Following are the other details:
 Cost of the bus = Rs 6,00,000
 Salary of the driver = Rs 2800 p.m.
 Salary of the conductor = Rs 2200 p.m.
 Salary of part time accountant = Rs 200 p.m.
 Insurance of the bus = Rs 4800 p.a.
 Diesel consumption 4 km per liter at Rs 6 per liter
 Road Tax = Rs 1500 p.a.
 Lubricant oil = Rs 10 per 100km
 Permit fee = Rs 315 p.m.
 Repairs and Maintenance = Rs 1000 p.m.
 Depreciation of the bus = @ 20% p.a.
 Seating capacity of the bus = 50 persons
Fare for Different Bus Routes (Continue)
Passenger tax 20%of the total takings. Calculate the bus fare
to be charged from each passenger to earn a profit of 30% on
total takings.

Required :
The fares are to be indicated per passenger for the journeys
(i) Delhi to Chandigarh (ii) Delhi to Agra (iii) Delhi to
Jaipur.
Solution
Calculation of total running Km per month
Km Per Trips Days Km Per
Particulars Per
Trip Per Day Month Month

Delhi To Chandigarh 150 2 8 2400

Delhi To Agra 120 2 10 2400
Delhi To Jaipur 270 2 6 3240
Total Running Km Per Month 8040
Solution (Continue)
Calculation of Total Seating Capacity
Particulars No of No of No of Total
seats trips Days seating
Capacity*
Delhi to Chandigarh and back 50 2 8 800

Delhi to Agra and back 50 2 10 1000

Delhi to Jaipur and back 50 2 6 600

Solution

Calculation of total running Km per month

Particulars Delhi to (including return)
Chandigarh Agra Jaipur
Total seating capacity p.m. * 800 1000 600
Capacity utilization 90% 85% 100%
Seats occupied Per month (i) 720 850 600
Km per trip (ii) 150 120 270
Passenger Km per month [(i) * (ii)] 108000 102000 162000
Total passenger Km per month 372000
 Solution (Continue)
Operating cost statement of Buses running between different
classes
Fixed Cost Rupees
Salary to the driver 2,800
2,200
Salary to conductor
200
Salary to part time accountant 10,000
Depreciation (600,000 * 20/100 * 1/12) 400
Insurance (4800 * 1/12) 125
Road Tax (1500 * 1/12) 1,000
Repairs and Maintenance 315
-------
Permit fees
17,040

Total Fixed Cost (a)

Solution (Continue)

Variable Cost
Diesel (8040 kms. / 4 kms.) * Rs 6 per litre 12,060
804
Lubricant oil (8040/ 100 Kms.) * Rs 10
--------
12,864
Total Variable Cost (b)
29,904
Total Cost (a+b) 29,904
Profit and Passenger tax (50% of total taking pm or --------
59,808
100% cost)
Total takings
Solution (Continue)
Passenger Tax (20% of takings) = Rs 11961.60
Profit (30% of takings) = Rs 17942.40
Rate per passenger km. = Rs 59808/ 372000
= Rs 0.161 per passenger km
Fare to be charged per passenger
Delhi to Chandigarh (150 km x 0.16) Rs 24.00
Delhi to Agra (120 km x 0.16) Rs 19.20
Delhi to Jaipur (270 km x 0.16) Rs 43.20