Service Costing – Knowsia

MI – Nov 2022 – L1 – SB – Q1c – Costing Methods

Calculation of cost per passenger kilometre for transport company

Question

Igodah Transport company has 15 passenger buses. The buses ply between towns ‘A’ and ‘B’, which are 60 kilometres apart in distance. The buses’ seating capacity is 50 passengers.
Extracts from the company’s books for last month are as follows:

Expenses	Amount (N)
Salaries of drivers and bus attendants	120,000
Diesel and other oil used	160,000
Vehicle repairs and maintenance	50,000
Insurance	60,000
Depreciation	113,000
Interest	90,000
Security	60,000
Car wash expense	50,000
Supervisor’s salary	50,000

Other details include:

The actual seating capacity carried for the month was 80%.
The buses worked for all 30 days of the month, making two trips per day.

Required:
Calculate the cost per passenger kilometre.

Answer

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Tags: Passenger Kilometre, Service Costing, Transportation Costs
Level: Level 1

Topic: Costing Methods
Series: NOV 2022

MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

Question

A business operates a guest house with 80 single room suites and 40 double room suites.
During the year in review:

The rent of the double room suite is twice that of the single room.
The occupancy of the single room suites is 100%, while that of the double room suites is 75%.
Assume that the year has 365 days.

Required:
Calculate the total number of room suites occupied during the year.

Answer

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Tags: Capacity Utilization, Room Occupancy, Service Costing
Level: Level 1

Topic: Costing Methods
Series: NOV 2022

MI – Nov 2022 – L1 – SB – Q1a – Costing Methods

Listing of service industries and corresponding units of cost

Question

Service costing is used in service industries or service departments of a company.
List in a tabular form FIVE examples of service industries and the “unit of cost” that can be used in each industry.

Answer

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Tags: Cost Units, Service Costing, Service Industries
Level: Level 1

Topic: Costing Methods
Series: NOV 2022

MI – Nov 2022 – L1 – SA – Q9 – Costing Methods

Calculation of room servicing cost per occupied room-night

Question

The following information is available for the W Hotel for the latest thirty-day period:

Number of rooms available per night: 40
Percentage occupancy achieved: 65%
Room servicing cost incurred: ₦3,900

The room servicing cost per occupied room-night last period, to the nearest Naira, was:
A. ₦3.25
B. ₦5.00
C. ₦6.50
D. ₦97.50
E. ₦150.00

Answer

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Tags: Occupancy Rates, Service Costing, Unit Cost
Level: Level 1

Topic: Costing Methods
Series: NOV 2022

MI – May 2021 – L1 – SA – Q9 – Costing Methods

Identify the costing method that uses composite cost units.

Question

Which of the following usually makes use of composite cost unit?

A. Job costing
B. Process costing
C. Contract costing
D. Batch costing
E. Service costing

Answer

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Tags: Composite Cost Unit, Costing Methods, Service Costing
Level: Level 1

Topic: Costing Methods
Series: MAY 2021

MA – Aug 2022 – L2 – Q5a – Standard costing and variance analysis

This question involves calculating the total hiring charge, running cost per kilometer, and effective transport charge for Carriers Private Ltd.

Question

Carriers Private Ltd (CPL) was recently formed with the objective of providing sand transport services. It purchased 10 Sand Trucks with a capacity of 5 cubic metres each at a cost of GH¢150,000 per Truck. The monthly running costs and other information have been forecasted as follows:

CPL expects each truck to run 5,000 kilometers a month during its lifetime of 4 years, which starts from the date of purchase. Out of the kilometers run each month, 50% is assumed to be by the empty truck that does not generate any revenue. At the end of year 4, each truck could be sold at an estimated consideration equivalent to 30% of the purchase cost.
The following salaries will be paid to workers in CPL:
- A driver would be paid GH¢700 per month. 11 drivers will be recruited, including a stand-by driver to replace a driver taking a leave.
- A cleaner would be paid GH¢500 per month and 11 cleaners will be recruited.
- Three office staff would be paid GH¢3,000 per month.
- A garage worker would be paid GH¢500 per month.
- Licensing and insurance per annum would be GH¢2,400.
- Servicing, repairs, and maintenance would be GH¢2 per running kilometer.
- The current fuel price per litre is GH¢7.30, and management expects to keep a leeway of 10% for inflationary adjustments. The empty truck could run 5 kilometers per litre, and when loaded could only run 3.25 kilometers per litre of fuel.

CPL expects to keep a profit mark-up of 30% on full cost.

Required:
i) Calculate the total hiring charge.
(6 marks)

ii) Determine the running cost for a month per kilometer.
(1.5 marks)

iii) Assess the effective transport charge for a month:

Per kilometer.
(1.5 marks)
Per cubic metre-kilometer.
(2 marks)

iv) Explain the importance of each cost unit in part iii) above, when applying them in different transport jobs.

Answer

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Tags: Cost Unit, Hiring Charge, Running Costs, Service Costing, Transport Costing
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: AUG 2022

MI – Nov 2022 – L1 – SB – Q1c – Costing Methods

Calculation of cost per passenger kilometre for transport company

Question

Expenses	Amount (N)
Salaries of drivers and bus attendants	120,000
Diesel and other oil used	160,000
Vehicle repairs and maintenance	50,000
Insurance	60,000
Depreciation	113,000
Interest	90,000
Security	60,000
Car wash expense	50,000
Supervisor’s salary	50,000

Other details include:

The actual seating capacity carried for the month was 80%.
The buses worked for all 30 days of the month, making two trips per day.

Required:
Calculate the cost per passenger kilometre.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Passenger Kilometre, Service Costing, Transportation Costs
Level: Level 1

Topic: Costing Methods
Series: NOV 2022

MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

Question

A business operates a guest house with 80 single room suites and 40 double room suites.
During the year in review:

The rent of the double room suite is twice that of the single room.
The occupancy of the single room suites is 100%, while that of the double room suites is 75%.
Assume that the year has 365 days.

Required:
Calculate the total number of room suites occupied during the year.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capacity Utilization, Room Occupancy, Service Costing
Level: Level 1

Topic: Costing Methods
Series: NOV 2022

MI – Nov 2022 – L1 – SB – Q1a – Costing Methods

Listing of service industries and corresponding units of cost

Question

Answer

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Tags: Cost Units, Service Costing, Service Industries
Level: Level 1

Topic: Costing Methods
Series: NOV 2022

MI – Nov 2022 – L1 – SA – Q9 – Costing Methods

Calculation of room servicing cost per occupied room-night

Question

The following information is available for the W Hotel for the latest thirty-day period:

Number of rooms available per night: 40
Percentage occupancy achieved: 65%
Room servicing cost incurred: ₦3,900

The room servicing cost per occupied room-night last period, to the nearest Naira, was:
A. ₦3.25
B. ₦5.00
C. ₦6.50
D. ₦97.50
E. ₦150.00

Answer

Find Related Questions by Tags, levels, etc.

Tags: Occupancy Rates, Service Costing, Unit Cost
Level: Level 1

Topic: Costing Methods
Series: NOV 2022

MI – May 2021 – L1 – SA – Q9 – Costing Methods

Identify the costing method that uses composite cost units.

Question

Which of the following usually makes use of composite cost unit?

A. Job costing
B. Process costing
C. Contract costing
D. Batch costing
E. Service costing

Answer

Find Related Questions by Tags, levels, etc.

Tags: Composite Cost Unit, Costing Methods, Service Costing
Level: Level 1

Topic: Costing Methods
Series: MAY 2021

MA – Aug 2022 – L2 – Q5a – Standard costing and variance analysis

This question involves calculating the total hiring charge, running cost per kilometer, and effective transport charge for Carriers Private Ltd.

Question

CPL expects each truck to run 5,000 kilometers a month during its lifetime of 4 years, which starts from the date of purchase. Out of the kilometers run each month, 50% is assumed to be by the empty truck that does not generate any revenue. At the end of year 4, each truck could be sold at an estimated consideration equivalent to 30% of the purchase cost.
The following salaries will be paid to workers in CPL:
- A driver would be paid GH¢700 per month. 11 drivers will be recruited, including a stand-by driver to replace a driver taking a leave.
- A cleaner would be paid GH¢500 per month and 11 cleaners will be recruited.
- Three office staff would be paid GH¢3,000 per month.
- A garage worker would be paid GH¢500 per month.
- Licensing and insurance per annum would be GH¢2,400.
- Servicing, repairs, and maintenance would be GH¢2 per running kilometer.
- The current fuel price per litre is GH¢7.30, and management expects to keep a leeway of 10% for inflationary adjustments. The empty truck could run 5 kilometers per litre, and when loaded could only run 3.25 kilometers per litre of fuel.

CPL expects to keep a profit mark-up of 30% on full cost.

Required:
i) Calculate the total hiring charge.
(6 marks)

ii) Determine the running cost for a month per kilometer.
(1.5 marks)

iii) Assess the effective transport charge for a month:

Per kilometer.
(1.5 marks)
Per cubic metre-kilometer.
(2 marks)

iv) Explain the importance of each cost unit in part iii) above, when applying them in different transport jobs.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Unit, Hiring Charge, Running Costs, Service Costing, Transport Costing
Level: Level 2

Topic: Standard Costing and Variance Analysis
Series: AUG 2022

Question Tag: Service Costing

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MI – Nov 2022 – L1 – SB – Q1c – Costing Methods

Calculation of cost per passenger kilometre for transport company

MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

MI – Nov 2022 – L1 – SB – Q1a – Costing Methods

Listing of service industries and corresponding units of cost

MI – Nov 2022 – L1 – SA – Q9 – Costing Methods

Calculation of room servicing cost per occupied room-night

MI – May 2021 – L1 – SA – Q9 – Costing Methods

Identify the costing method that uses composite cost units.

MA – Aug 2022 – L2 – Q5a – Standard costing and variance analysis

This question involves calculating the total hiring charge, running cost per kilometer, and effective transport charge for Carriers Private Ltd.

MI – Nov 2022 – L1 – SB – Q1c – Costing Methods

Calculation of cost per passenger kilometre for transport company

MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

MI – Nov 2022 – L1 – SB – Q1a – Costing Methods

Listing of service industries and corresponding units of cost

MI – Nov 2022 – L1 – SA – Q9 – Costing Methods

Calculation of room servicing cost per occupied room-night

MI – May 2021 – L1 – SA – Q9 – Costing Methods

Identify the costing method that uses composite cost units.

MA – Aug 2022 – L2 – Q5a – Standard costing and variance analysis

This question involves calculating the total hiring charge, running cost per kilometer, and effective transport charge for Carriers Private Ltd.

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MI – Nov 2022 – L1 – SB – Q1c – Costing Methods

Calculation of cost per passenger kilometre for transport company

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MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

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MI – Nov 2022 – L1 – SB – Q1a – Costing Methods

Listing of service industries and corresponding units of cost

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MI – Nov 2022 – L1 – SA – Q9 – Costing Methods

Calculation of room servicing cost per occupied room-night

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MI – May 2021 – L1 – SA – Q9 – Costing Methods

Identify the costing method that uses composite cost units.

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MA – Aug 2022 – L2 – Q5a – Standard costing and variance analysis

This question involves calculating the total hiring charge, running cost per kilometer, and effective transport charge for Carriers Private Ltd.

You're reporting an error for "MA – Aug 2022 – L2 – Q5a – Standard costing and variance analysis"

MI – Nov 2022 – L1 – SB – Q1c – Costing Methods

Calculation of cost per passenger kilometre for transport company

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MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

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MI – Nov 2022 – L1 – SB – Q1a – Costing Methods

Listing of service industries and corresponding units of cost

You're reporting an error for "MI – Nov 2022 – L1 – SB – Q1a – Costing Methods"

MI – Nov 2022 – L1 – SA – Q9 – Costing Methods

Calculation of room servicing cost per occupied room-night

You're reporting an error for "MI – Nov 2022 – L1 – SA – Q9 – Costing Methods"

MI – May 2021 – L1 – SA – Q9 – Costing Methods

Identify the costing method that uses composite cost units.

You're reporting an error for "MI – May 2021 – L1 – SA – Q9 – Costing Methods"

MA – Aug 2022 – L2 – Q5a – Standard costing and variance analysis

This question involves calculating the total hiring charge, running cost per kilometer, and effective transport charge for Carriers Private Ltd.

You're reporting an error for "MA – Aug 2022 – L2 – Q5a – Standard costing and variance analysis"

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