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| Corporate practice bd |
What is Operating Costing?
Operating costs is a cost that does not include all manufacturing cost but also associated with the day by day operating, maintenance and administration cost of a business. Its specially entitle to Public servicing running, Advisory consultancy cost.
Operating costs are
Included as follows
01. Utility costs, the cost of electricity
02.Salary
and wage expenses
03.Raw materials
04.Direct labor cost
05.Overhead costs
06.Property taxes
07.Office expenses
08.Cost of repairs
09.Rent expense
10.Insurance Premium
11.Equipment purchase
12.Depreciation expense
13.Interest Expense
14.Salaries
15.Sales commission
16.Office expense
17.License fee
18.Office supply
19.Vehicle expenses
20.Travel expenses
21.Bank charge
22.Sales and marketing costs
23.Entertainment costs
24.lease payments
25.Accounting and legal fees
Where
applicable Operating costing?
01.Transport agency
02.Electricity supply
03.Air lines service
04.Hospitals
05.Power house
06.Canteen service
07.Rod Maintenance
08.Gas
09.Water supply
10. Cinema theaters
Let,s start with Practical Example - (CMA-Dec-2017)
Practical Example. (01) (Try yourself)
A person owns a bus which runs between chittagong and dhaka for 15 days in a month .The distance from chittagong to dhaka is 300 K.M .The bus complete the trip from chittagong to dhaka and back the same day.The bus goes another 10 days in a month towards cox,s bazar. The distance from chittagong to cox,s bazar is 150 K.M.The trip to cox,s bazar and back is also completed same day.The other particulars are given below.
Cost of the bus Tk.75,00,000
Depreciation 20% per annum
Interest on capital 10% per annum
Salary of driver Tk. 35000 per month
Salary of the conductor Tk. 20000 per month
Office expense Tk. 30432.00 per month
Salary of part time accountant Tk. 15000 per month
Insurance Tk.24000 per annum
Diesel consumption:8 KM per litre costing Tk.72.00 per litre
Lubricant Tk.70.00 per 100 K.M
Taxes & fees Tk. 60000 per annum
Repair & maintaining Tk.23568 per month
Registration & rod license Tk. 30,000.00 per annum
Normal capacity of the bus 54 persons
The bus generally occupied 90% of capacity
Requirement
01. Calculate the fare that each passenger should pay for each of the trips if the owner wants to earn a profit of 25% on takings.
very nice
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