Reference no: EM131081327

SMC expenses of operating a single bus and the fleet of five buses for a year

SMC is a public school having five buses each plying in different directions for the transport of its school students. In view of a larger number of students availing of the bus service the buses work two shifts daily both in the morning and in the afternoon. The buses are garaged in school. The workload of the students has been so arranged that in the morning the first trip picks up senior students and the second trip plying an hour later picks up the junior students. Similarly in the afternoon the first trip takes the junior students and an hour later the second trip takes the senior students home.

The distance travelled by each bus one way is 8 km. The school works 25 days in a month and remains closed for vacation in May, June and December, Bus fee however, is payable by the students for all 12 months in a year.

The details of expenses for a year as under

Driver's salary	Rs 600 per month per driver
Cleaner's salary	Rs 350 per month
(Salary payable for all 12 months)
(One cleaner employed for all the five buses)
Licence fee, taxes, etc.	Rs 900 per bus per annum
Insurance	Rs 1,000 per bus per annum
Repairs and maintenance	Rs 3,500 per bus per annum
Purchase price of the bus	Rs 2,00,000 each
Life 12 years
Scrap value	Rs 20,000
Diesel cost	Rs 2.00 per litre
Each bus gives an average mileage of 4 km per litre of diesel
Seating capacity of each bus is 50 students.
The seating capacity is fully occupied during the whole year.

Students picked up and dropped within a range up to 4 km of distance from the school are charged half fare. 50% of the students travelling in each trip in this category ignore interest. Since the charges are to be based on average cost, you are required to:

1. Prepare a statement showing the expenses of operating a single bus and the fleet of five buses for a year.
2. Work out the average cost per student per month in respect of

1. Students coming from a distance of up to 4 km from the school and
2. Students coming from a distance beyond 4 km from the school.