1. INTRODUCTIONIt is a method of ascertaining costs of providing
or operating a service. This method of costing is applied by those
undertakings, which provide services rather than production of
commodities. The emphasis under operating costing is on the
ascertainment of cost of services rather than on the cost of
manufacturing a product. This costing method is usually made use of
by transport companies, gas and water works departments,
electricity supply companies, canteens, hospitals, theatres and
schools.Operation costing is an advanced form of job-order and
process costing. Operation costing uses the methods that are found
in either process or job-order costing. Service costing is the cost
of providing a service. In other words, service costing is a method
of costing applied to determine the cost of rendering service. It
is adopted by those businesses, which operate a service rather than
produce goods. Service is their final product and this service is
sold to consumers. This service may be used within the enterprise
as in the case of canteen boiler houses and so on; or may be
rendered to the public as in state transport, hospitals,
electricity and so on. Service provided within the organization is
known as internal service.
2. Methodology The sources of data used in this project report
are both primary and secondary data 1. Primary data Primary data
consists of original information gathered from Mrugesh Transport
service.2. Data collection:- (Secondary data)In data collection
method we shall collect the secondary data from the following
sources.BooksInternet
3. Data CollectionOperating costing MeaningOperating costing is
the method used to ascertain the cost of providing a service such
as transport, hotel, hospital, gas or electricity. Operating Costs
denote the costs of providing a service as opposed to cost of
manufacturing a product. CIMA has defined operating costing as that
form of operation costing which applies when standardized services
are provided either by an undertaking or by a service cost centre
within an undertaking. Cost Accounting Standard-1by ICWA defines
Operating Cost as the cost incurred in conducting a business
activity. Operating cost refer to the cost of undertakings, which
do not manufacture any product but which provide services
Definition of 'Operating Cost'Expenses associated with
administering a business on a day to day basis. Operating costs
include both fixed costs and variable costs. Fixed costs, such as
overhead, remain the same regardless of the number of products
produced; variable costs, such as materials, can vary according to
how much product is produced.
Nature of Operating Costing
The main objective of operating costing is to compute the cost
of the services offered by the organization. For doing this, it is
necessary to decide the unit of cost in such cases. The cost units
vary from industry to industry. For example, in goods transport
industry, cost per ton kilometer is to be ascertained while in case
of passenger transport, cost per passenger kilometer is to be
computed. Cost units used in different service units are explained
in detail later in chapter. The next step is to collect and
identify various costs under different headings. The headings used
are,_ Fixed or standing charges_ Semi- axed or maintenance charges_
Variable or running charges.
One of the important features of operating costing is that
mostly such costs are .axed in nature. For example, in case of
passenger transport organization, most of the costs are axed while
few costs like diesel and oil are variable and dependent on the
kilometers run. In the following paragraphs, method of computing
costs in various service organizations is explained.
FEATURES OF OPERATING COSTING
The main features of operating costing are as following:
(1) The undertaking which adopts service costing does not
produce any tangible goods. These undertakings render unique
services to their customers.
(2) The expenses are divided into fixed and variable cost . Such
a classification is necessary to ascertain the cost of service and
the unit cost of service.
(3) The cost unit may be simple or composite. The examples of
simple cost units are cost per unit in electricity supply, cost per
liter in water supply, cost per meal in canteen etc. Similarly cost
per passenger kilometers in transport cost per patient-day in
hospital, cost per room-day in hotel etc. are the examples of
composite cost unit.
(4) Total cost are averaged over the total amount of service
rendered.
(5) Costs are usually computed period-wise. However, in the case
of utilization of vehicles, use of road-rollers etc., the costs are
computed order wise .
(6) Service costing can be used for service performed internally
or externally.
(7) Documents like the daily log sheet, cost sheet etc. are used
for the collection of cost data.APPLICATIONOperating costing is
employed in different types of service industries such as Transport
Services e.g Truck Operator, Road Transport, Railway , Air etc.
Municipal Services like Road Maintenance Garbage Disposal, Street
Lighting etc. Supply Services such as Electricity, steam, gas water
etc. Welfare Services e.g. Canteen, Hospital, Library etc.
COST UNITFor ascertaining costs, it is necessary to decide
suitable cost units for each type of service industry. Basically,
Operating Costing is a type of Process Costing. Thus it uses the
methods of Process Costing when ascertaining the cost of supply of
electricity, steam etc. However, sometimes Operating Costing may
adopt a particular Job as a unit of cost as for example when
costing a particular trip by a bus so as to quote the charges. In
such cases Operating Costing uses the methods of Job Costing by
treating a specific trip as a separate job. A cost unit under
operating may be of two types (a) simple cost unit; or (b)
Composite cost unit.
PROCEDURE
(1) Determine Cost Unit : The first step in Operating costing is
the determination of the cost Unit, This is a complex task as
explained in Para 1.3(2) Ascertain Cost: The next point to be noted
is that Operating Costs are Period Costs. The costs of supplying
the services for a period are ascertained in the following manner
(taking the example of a transporter)(a) Vehicle No: Each vehicle
is treated as accost centre and given a specific number. All the
costs are accounted against this number. A separate Account is
opened to record the Costs and Income of each vehicle.(b) Variable
costs: variable costs are the running and operating charges. These
include expenses of variable Nature, e.g. petrol, diesel,
lubricating oil, grease etc. The Material Requisition Note and Time
sheet (or Log) bears the vehicle No. The relevant vehicle Account
is debited with its direct material cost and direct labour cost.
Direct Expenses such as fuel are debited to the vehicle Account on
the basis of the Log Book and the cash/purchase/journal
vouchers.(c) Fixed costs: Fixed costs (Fixed charge) include garage
rent, insurance, road, licence fees etc. The Fixed charges are
apportioned and absorbed by each vehicle No on the basis of the
overheads Absorption Rate which may be Actual or Pre determined.
The fixed costs attributable to the vehicle are debited to the
relevant vehicle Account.(d) Revenue: The revenue from the vehicle
is credited to the vehicle Account. (e) Profit or Loss: The vehicle
Account at this stage will reveal the profit or loss made on
operating that vehicle.
Need help with Operating cost
Operating costs are costs that are incurred on a day-to-day
basis related to the business operations. It can also be related to
the operation of a device, component, and piece of equipment or
facility. Operating costs are also known as operating expenses. For
example sales and administration costs are operating costs.
Operating costs are referred to as cost per unit of a product or
service, or the annual cost incurred on a continuous process. The
operating costs are those that do not include capital outlays or
the costs incurred in design and implementation phases of a new
process.Operating costs are divided into two categories. They are
fixed costs and variable costs. Fixed costs are those which are
fixed and do not vary with the changes in the level of output. They
do not change whether the business is inactive or operating at full
capacity. Variable costs are those costs which vary with the
changes in the level of output. Flexible expenditures are also
known as the variable operating costs. The expenses fluctuate on
the basis of a variety of factors.Operating expenses differ in
every country. The actual expenses vary in every location. The
calculation of operating costs is essential for sound business
planning. These costs should be properly budgeted; otherwise it
will adversely affect the business. The lack of planning in a
business increases the risk that a business will not maintain
adequate funds to operate properly. When the operating costs are
fixed, the likely business interruptions or economic declines
should be taken into consideration. The business generally cannot
be deferred until a business finds it convenient to pay them. Fixed
operating costs are set on a payment schedule and need to be paid
accordingly for the company to maintain good credit.OPERATING COST
OF TRANSPORTERComparative modal transport cost estimates provide
planners with the tools for identifying cost effective range of
operations for transport of men and material by various modes with
the objective of deciding investment allocations aimed at achieving
an optimal modal mix for integrated development of the transport
sector. To meet this objective, the cost estimates have to be
comprehensive enough to include not only the costs related to modal
operations but also other costs associated with freight and
passenger transport. Accordingly, modal transport costs have two
components viz. costs incurred by the operator or the service
provider and costs incurred by the user i.e. consignor/consignee of
goods for freight movement and passengers in the case of passenger
travel. Cost to the operator comprises cost of operation of the
service, repair and maintenance of infrastructure and moving units,
overheads, re placement costs and investments in up-gradation of
the system. User cost structure varies with mode. User cost in the
case of goods transport by Rail relates to packing of goods,
cartage (local transit) from consignors go down to loading terminal
at origin and from unloading terminal to consignees go down at
destination, handling of goods at either end, transit losses, rail
siding and transit inventory costs. Cost elements are similar in
the case of Coastal Shipping and Airways except that rail siding
cost gets excluded. In the case of Road Transport which provides
door to door service, both railway siding costs and local transit
costs are not relevant. For passengers, user cost includes cost of
ingress and egress in the nature of local travel and porter age at
the terminals at either end. Sum of the two cost components i.e
operator and user cost reflects the total cost of transport of a
tone of goods or a passenger by a particular mode for an identified
distance slab. HIGHWAYSThe unit cost of transportation for various
modes plays an important role in defining the importance of each
mode and thus affecting the inter-modal choice of the users. Unit
cost comprises both noticeable (quantifiable costs) and concealed
(non-quantifiable) costs. While the quantifiable costs are worked
out by using element-wise ongoing market prices, the
non-quantifiable costs are estimated on normative basis, where the
norms are developed not as a part of the same exercise but after
going through a detailed analysis of limited data/information. In
the case of Highways (road transport), unit operating costs of
carrying goods and/or passengers can be divided in two categories -
vehicle operating costs and the user costs. While the vehicle
operating costs are directly borne by the service providers or the
vehicle owners, the user costs are incurred by the users of the
service before the actual start of the modal transportation as well
as after the completion of the transport service and are thus in
addition to the vehicle operating costs. The later element of cost
relates mainly to packaging, handling, local cartage, inventory,
etc. in the case of goods transport sector. For passenger transport
it relates to the distance travelled by the passenger from his
actual place of start (stay) to the bus terminal at origin and
similar leg of journey at destination to reach his final
destination. Under goods transport local cartage of cargo is
considered only in the case of parcels, which involve consolidation
of goods by the booking agents to form a full vehicle-load for a
particular destination.The requisite cost structure has been
developed by collecting item-wise cost incurred by various agencies
in financial terms. All the costs have been collected to represent
the base year 2007-08, to complement goods and passenger flows data
estimated based on detailed surveys. Financial costs for different
components have been converted into economic terms by adopting
relevant norms prescribed by the Planning Commission, Govt. of
India. Almost all the cost elements remain unchanged both in
financial and economic cost structures, except highways cost,
accidents, environment and other social costs. While the highway
(road) cost is considered as a part of the vehicle operating costs
under the economic costing, in financial costing various taxes
payable by the vehicle owner (such as road tax, goods or passenger
tax, etc) are considered in lieu of this. Similar remarks hold good
for costs relating to accidents, environment and other social costs
which are considered in addition to the vehicle operating costs
under economic costing. The entire cost structure has been divided
into three categories, i.e. vehicle operating costs, highway cost
and the users costs. Vehicle Operating Costs In spite of the fact
that both goods and passenger transport use similar type of
vehicles and perform on the same infrastructure, their operations
are not similar. Moreover, in the goods sector where private
operators play a significant role, public sector is more effective
in the passenger transport sector, because of various reasons. In
the light of this, while estimating vehicle operating cost norms,
goods and passenger sectors are considered independently. Vehicle
operating costs have been estimated to reflect the entire spectrum
of costs borne by the vehicle owners/operators as service
providers. Since these costs vary under different operating
conditions such as terrain, highway quality, commodity handled,
etc., an attempt has been made to distinguish costs structure to
reflect all these operating conditions. Further, with a view to
ascertain cost discrimination arising on account of varying vehicle
operating conditions, both due to ownership as well as operating
conditions in different parts of the country, the sample frame for
collecting information has been drawn from all over India. In order
to estimate the relative vehicle operating costs under different
operating conditions the requisite information has been collected
by canvassing specially designed questionnaires. Keeping in view
the predominance of single-truck owners/operators in goods
transport sector and the method of their maintaining
records/information on vehicle performance and cost particulars,
separate questionnaires have been used for single-truck operators
and multi-vehicle operators. While for the multi-vehicle operators,
the information has been culled out from their records, for the
single-vehicle operators person al interview method was adopted for
collection of the required information from the crew. Reverse holds
good in the case of passenger transport sector, where main emphasis
was given to collect information from the State Road Transport
Undertakings. In view of the fact that details of certain good s
vehicle operating costs as well as operating behavior can be
elicited more accurately from the vehicle crew, the required
information was collected by canvassing a specially designed
questionnaire on Vehicle Performance and Cost Behaviors survey
along with the goods O-D survey conducted at more than 1000
check-posts all over the country. On the other hand, for the more
organized passenger transport operations, similar information could
be collected on the basis of sample interviews with the crew
working on various routes.
Time Related Costs Capital Costs: In view of the fact that
capital investment is a one-time cost and needs to be recovered on
the entire performance of the vehicle, annualized costs have been
estimated using cost recovery factor (CRF) technique. All the
information on capital cost was used to represent a new vehicle.
Vehicle Taxation: Regarding the existing vehicle taxation system,
information on vehicles with different tax options has been
collected. Since it was not feasible to segregate the sample on the
basis of tax options, an overall tax for various categories of
vehicles operating on different distance ranges has been estimated
to work out the modal costs. Crew Cost: To estimate the cost on
vehicle crew relating to different types of vehicles, information
collected from the sample crew (private sector only) has been
adopted, keeping in view their overall share in the road transport
market. Monthly allowances such as uniform allowance, festival
allowance, dearness allowance, if any, are also included under the
crew costs. Details on these cost elements have been collected
through the sample drivers during Cost & Performance Behaviors
Survey. Vehicle Insurance: It is obligatory to get the vehicle
insured before it is put on road. The insurance charges vary from
vehicle to vehicle de pending upon various factors. In the current
study, insurance paid by the operator (as obtained from his
records) has been considered and an overall insurance figure has
been worked out for different categories of vehicle. Overhead
Costs: Although the goods road transport sector has preponderance
of single-vehicle operators, the overhead charges may or may not be
applicable in their case. However, in this study, the overhead
expenditure reported by the multi-vehicle operators as well as the
single-vehicle operators, on staff which is not working as vehicle
crew members but are providing necessary services for vehicle
operations, the cost indicated to meet such services has been
included in the time-related cost estimates. Running Costs Fuel
Costs: Expenditure on fuel is one of the major cost elements of
vehicle operations and predominantly diesel is the main fuel used
in the goods vehicles. Although the unit price of diesel is fully
controlled by the central government, cost per unit is charged
differently in different states after adding the local state taxes.
In this exercise, the actual cost incurred by the operator has been
collected and incorporated to arrive at per unit transport cost.
Efforts have also been made to independently estimate the fuel cost
norms for each road terrain condition as well as to reflect the
cost variations arising on account of the road conditions. Mobil
Oil & Lubricants Cost: In order to reflect their imp act on
different road and vehicle conditions, the Mobil oil &
lubricant costs are considered independent of the repair &
maintenance costs. Vehicle Repair & Maintenance Cost (R&M):
Repair and maintenance cost is another major head of expenditure
incurred by the vehicle operator on regular basis. In view of the
fact that newer vehicles require lesser repair & maintenance
expenditure, more so, the periodical overhaul, which involves
sizeable expenditure and is undertaken once after 2 or 3 years
(above the performance recommended by the vehicle manufacturer),
the overall sample was drawn covering all category of vehicles. All
the costs, on scheduled (at headquarter) and responsive
(en-route/wayside and at terminals) repairs have been estimated.
Types & Tubes Cost: Like repair & maintenance, expenditure
on types and tubes is another important head. Nowadays with a
growing number of multi-axle vehicles on road the expenditure on
types and tubes is more than the repair & maintenance cost.
While estimating overall costs on types & tubes, re-soling
costs as well as the resale value obtained by the operator, if
reported, has also been considered and included under this head of
cost. Trip-allowance to crew: In addition to salary, crew is given
daily allowance (Bhatta) to meet their day to day expenditure
(towards food, etc). In majority of the cases, such an amount is
authorized by the owner of the vehicle to crew on daily basis as a
part of the en-route expenditure. In certain cases to attract
better performance, some of the operators have attached it to the
round trip, which may be different for different O-D pairs. It is
pertinent to note that the days when the vehicle is laid-off due to
major repairs or non-availability of loads, the operator continues
to the pay daily allowance to vehicle crew. In this exercise the
daily allowance (as reported) has been used as a part of the VOC.
Other Operating Costs: Costs such as en-route toll and octopi
charges, weigh-bridge charges, commission paid to middle agency for
arranging loads (cargo), minor repair charges, parking fees and
other incidental charges (fines, penalties, Police expenditure,
etc.) are included under this head. These costs are incurred by
driver and are different on different routes. Item wise expenditure
for each type of vehicle to represent each category has been
tabulated in the format described below. Wherever, the cost for any
item was reported for the period other than base year, costs of the
base year ha vet been used particularly in case of purchase price
of vehicle chassis and body fabrication, because of sample mix,
representing different vehicle age.
Highways Cost (Road) The entire road network of the country is
under the direct control of government agencies. Based on the
funding or controlling agencies the road network is categorized as
National Highways (NH) including Border Roads, State Highways (SH),
Major District Roads (MDRs), Other District Roads (ODRs), Village
Roads (VR) or Projects Roads (PR). In the current study, which
covers the entire country except the Andaman& Nicobar and
Lakshadweep islands, a limited network that provides
inter-connection to all the 623 regions identified in the study
area has been used. he study network has been extended up-to MDRs.
Table-5.18 brings out the proportionate share of various categories
of roads covered in the study. TABLE-5.18: LENGTH OF DIFFERENT
TYPES OF ROADSSNHIGHWAY TYPEROAD NETWORK*STUDY NETWORK**%
COVERAGE
1Expressways200200100
2National Highways665905229778.54
3State Highways1318999340270.81
SUB TOTAL19868914589973.43
4Major District Road46776381691.746
5Village and Other Roads265000000
TOTAL33164521540684.65
In view of the fact that the road network under study comprises
not only the two lane and above capacity road sections, the highway
costs have been estimated separately to match the entire road
network composition. Where the National Highway and State Highway
sections comprised single-lane, two-lane, four-lane, and 4 to
6-lane Expressway sections, Major District Roads covered
single-lane, intermediate-lane and two-lane sections only. Although
length of 4-lane and 4-lane Expressway is very much limited in the
rolling and hilly terrain, comparative costs have also been
estimated keeping the future transport demand in view. Highway cost
is borne directly by the government. Since it is not feasible to
develop historic Highway systems cost, for the purpose of the
current study, a new set of costs have been estimated based on the
current market price (bas e year costs). Relevant information has
been collected through various Highway Projects/studies conducted
by RITES Ltd on behalf of National Highway Authority of India
(NHAI) and other government agencies. In addition, to account for
annual repair & maintenance of road sections, the requisite
information has been collected from the concerned government site
offices. Estimated keeping the future transport demand in view. In
order to estimate base year costs of each type of road section,
item wise quantities of work and the related costs have been worked
out. Since in majority of the cases the land has already been
available with the government for construction of new road section
or up-gradation of the existing section, land cost is considered as
sunk. The entire set of activities towards construction of a new
road link has been classified under the following sub-heads: Site
clearance Earthworks Sub-Base and Base Courses Bituminous Courses
Cross Drainage Works (Culverts) New Bridges, Underpasses, Grade
Separators and Drainage and Protective works Miscellaneous Efforts
have been made to select road sections spread all over the country
to develop homogeneous cost norms. Based on the estimate d
quantities of work under each item, total input costs have been
estimated by using 2007-08 price structure applicable in that
region. To arrive at the total capital cost of the road section
under study, Environmental Cost, Resettlement and Rehabilitation
Cost, Relocation of Utilities Cost, etc. wherever applicable; have
also been considered in addition to expenditure towards other
contingencies, construction supervision, etc. Item-wise financial
costs were converted into economic terms by using appropriate
conversion factors developed on the basis of detailed studies of
limited sample road sections, as the highway costs are relevant
only for economic costing.
Transport Organization
Transport undertakings include goods transport organizations as
well as passenger transport organizations. The cost unit is either
ton kilometer or passenger kilometer. The meaning is cost of
carrying one ton over a distance of one kilometer or cost of
carrying one passenger for a distance of one kilometer. The costs
are shown under the following heads._ Standing Charges or Fixed
Costs: These are the. axed costs, which remain constant
irrespective of the distance travelled. These costs include the
following costs.1) License fees and insurance2) Salaries of
drivers, cleaners and conductors3) Garage costs which include
garage rent and other relevant expenses4) Depreciation of the
vehicle and other assets5) Taxes applicable6) Any other. Axed
charge like administrative expenses etc._ Variable Costs or Running
Costs: These costs include,1) Petrol and diesel2) Oil3) Grease4)
Any other variable costs_ Maintenance Charges: These charges
include expenses like repairs and maintenance, tire, and other
charges connected with maintenance like servicing of the vehicles
etc.
Transportation Cost Worksheet
Owning and operating a vehicle can be more expensive than you
think! By writing down your actual expenses, you can get an idea of
how much money could be available for alternative transportation if
you were to stop driving. To determine the annual expense to own
and operate a car, list all the related expenses below. Dont forget
to multiply by 12 for monthly expenses, or by 52 for weekly
expenses. For less frequent expenses, such as tires, estimate the
cost and divide by the number of years between expenses. Once you
have the annual expense for owning and operating the vehicle, you
can get a better idea of how much you are already spending on
transportation.
4. SolutionQuestion Mrugesh Transport services its goods to a
regional dealer using a single Lorry. The dealer's premises are 40
kilometers away by road. The lorry has a capacity of 10 tons and
makes the journey twice a day fully loaded on the outward journeys
and empty on return journeys. The following information is
available for a Four Weekly period during the year 1990:Petrol
consumption 8 kilometers per literPetrol cost Rs. 13 per literOil
Rs. 100 per weekDriver's wages Rs. 400 per weekRepairs Rs. 100 per
weekGarage Rs. 150 per weekCost of Lorry (Excluding Tyros) Rs. 4,
50,000Life of Lorry 80,000 kilometersInsurance Rs. 6,500 per
annumCost of Tyres Rs. 6,250Life of Tyres Rs. 25,000
kilometersEstimated sale value of Lorry at the end of its life
Rs.50, 000Vehicle License Cost Rs. 1,300per annumOther overhead
cost Rs. 41,600 per annumThe Lorry operates on a five day week.
Required:(a) A statement to show the total cost of operating the
vehicle for the four weekly periods analyzed into running costs and
fixed costs.(b) Calculate the vehicle cost per kilometer and per
ton kilometer.Answer(a) Mrugesh Transport services ' Statement of
Operating Cost of the Vehicle (For the four weekly period)Running
Costs Rs.Petrol Cost 5,200(Refer to Note 1)Oil expenses 400Driver's
wages 1,600Repairs 400Tyre Cost 800(Refer to Note
2)Depreciation16,000(Refer to Note 3)Total running cost (A)
24,400Fixed CostsGarage rent 600Insurance 500(Refer to Note
4)Licence Cost 100(Refer to Note 5)Other Overhead 3,200(Referto
Note 6)Total Fixed Cost (B) 4,400Total Cost (A + B )28,800
(b) Cost per Kilometer 28800 = Rs. 93200
Rs 28200 100 = Rs.1.80Cost per ton Kilometer= 1600km 10
tonne
Working Note1. Total distance travelledby lorry in 4 weeks=80
km. (distance traveled in 1 trip) 2 trips 20 days.= 3,200 km.Total
consumption of petrolin 4 weeks= 3200 km = 400 liter8 kmPetrol cost
(for 4 weeks) = 400 litres Rs. 13.= Rs. 5,2002. Total distance
travelled in 4 weeks= 3,200 km.Tyre Cost (for 4 weeks) = Rs. 6250
3,200 km 25,000 km.= Rs. 8003. Cost of Lorry= Rs. 4,50,000Estimated
sales value of lorry at the end of its life = Rs. 50,000Life of
lorryDepreciation (for 4 weeks) = Rs. 4,50,000 50,000 3,200
km80,000= Rs. 16,000
4. Insurance (for 4 weeks)= Rs 6,500 4 weeks 52 weeks = Rs.
5005. Licence Cost (for 4 weeks) = Rs 1,300 4 weeks 52 weeks =
Rs.100
QUESTIONAIRE1. Who is the owner of Transport Company? Ans
Shailesh Bhikubai Bhavashar2. Number of trucksAns 3 (three)3.
Number of DriversAns 6 (six)4. Number of CleanersAns 6 (six)5.
Drives salariesAns 8,000 per months6. Cleaners salariesAns 5,000
per months7. Depreciation on trucksAns 10,000 per annum8. Insurance
of Trucks Ans 9,000 per annum9. Repairs and maintenanceAns 20,000
per annum10. Road TaxAns 4,000
5. ConclusionsThe use of truckloads and kilometers per truckload
is not the most commonly used independent variable in trucking cost
estimation exercises. Many studies (McMullen, teal) have used tons
and ton-miles (or ton-kilometers) as output measures. The survey
lacked such data. It is recommended that future studies include
this data, as well as variables such as average load sizes,
percentage of time running empty (backhaul) and the prices of labor
and overhead. The total operating cost model estimation also does
not show the impact of road quality on operating cost. It may be an
important factor in operating cost as low quality roads can reduce
the life of tires, increase fuel consumption and also increase the
maintenance cost. It may also reduce travel speed, thereby
increasing labor cost.
6. References
Books M.com-1 Advanced cost Accounting
Websites
http;//en.wikipedia.orgwww.transport.new.govwwwbusinessdictionary.com26
