CA Inter P4 · Chapter 11 · Question 2 of 8
The bus described above incurs total operating costs of ₹4,50,000 per month for 6,00,000 passenger-km. The fare per passenger-km required to earn a profit of 20% on takings (rounded to the nearest paisa) is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) ₹0.94
Explanation
Cost per passenger-km = ₹4,50,000 / 6,00,000 = ₹0.75. If profit is 20% of takings, cost is 80% of the fare: fare = ₹0.75 / 0.80 = ₹0.9375, i.e. ₹0.94 rounded. Adding 20% to cost (₹0.90) gives profit of only 16.67% on takings.
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