Bcom 2nd Year Operating cost notes
Meaning of operating costs
Many organizations do not produce goods, but rather provide some services. For example, railways, motor companies, tramways, waterways, gas and electricity companies, hospitals, hotels, post and telegraph departments do not produce goods but provide services. Most of the expenses in these institutions are of a permanent nature. The motor traffic company wants to know what it will cost to carry one tonne of goods a kilometer. A motor-bus service or railway company wants to know what the cost will be per passenger per kilometer. Similarly, an electricity company wants to know what the cost of electricity per kWh or per unit will be. Unless we have the right knowledge of costs, The fair value of the service provided cannot be determined. Service delivery organizations use the operating cost method to find the operating cost or operating cost. Cost per unit can be determined by dividing the total expenditure or the number of units in the total cost. Bcom 2nd Year Operating cost notes
Objectives for finding transportation costs
Objects of Transport Costing
Transport organizations carry and carry goods of different loads, sizes and types from one place to another. These institutions want to know what is the cost of transporting one quintal goods one kilometer? So that the rates of the fare can be determined. Apart from this, the following objectives of determining the transportation cost can be
(iv) Control over repair and maintenance expenses. csscanne Cost Unit – In transportation costs, a quittal freight is used as a unit carrying one kilometer, called a quittal / kilometer (QL / km), as passengers are transported from one place to another, So a traveler has a
Carrying the loameter is used as a unit, called “passenger kilometer
(Passenger / km.).
Before the use of the metric system, these units were called “ton / mile” and passenger mile. Bcom 2nd Year Operating cost notes
Calculation of Cost
The total permanent, operating and maintenance expenses of the year are divided by the “total quilt / km” of the total cargo carried in the year or the “total passengers / km” of all the passengers carried. The calculation formula will be as follows:
Variable charges
The expenses which are incurred on keeping the vehicle safe and driving the vehicle are kept in this category. Such as repair and maintenance expenses, lubricants, tire tubes, petrol, diesel, depreciation, assistant and driver’s salary etc.
Use as a unit, which is called Qtl / km (QL / km). If the passengers are moved from one place to another, then a passenger is given a
Carrying the loameter is used as a unit, called “passenger kilometer
(Passenger / km.).
Before the use of the metric system, these units were called “ton / mile” and passenger mile.
Bcom 2nd Year Operating cost notes
related post
- Importance and Elements of Cost
- Materials
- Labour
- Overheads
- Contract and Job Costing
- Process Costing
- Operating Cost
- Reconciliation of Cost and Financial Accounts
- Unit of Output costing
- Tender price
- Machine Hour Rate
- Cost Contral Account and Integrate Accounts
