Question:
Sohan Singh has started transport business with a fleet of 10 taxis. The various expenses incurred by him are given below:
1. Cost of each taxi-Rs 75,000
2. Salary of office staff-Rs 1,500 p.m.
3. Salary of garage staff-Rs 2,000 p.m.
4. Rent of garage-Rs 1,000 p.m.
5. Driver's salary (per taxi) -Rs 400 p.m.
6. Road tax and repairs per taxi-Rs 2,160 p.a.
7. Insurance premium at 4% of cost p.a.
The life of a taxi is 3,00,000 km at the end of which it is estimated to be sold at Rs 15,000. A taxi runs on an average 4,000 km per month of which 20% of it runs empty. Petrol consumption is 9 km per litre of petrol costing Rs 6.30 per litre. Oil and other sundry expenses amount to Rs 10 per 100 km.
Calculate the effective cost of running taxi per kilometre. If the hire charge is Rs 1.80 per km, find out the profit Sohan Singh may expect to make in the first year of operation.