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Recording Actual Coach Costs

20th June 1952, Page 46
20th June 1952
Page 46
Page 47
Page 46, 20th June 1952 — Recording Actual Coach Costs
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At the Cost of a Little Time and Thought, the Coach Proprietor Can Work out for Himself a Cost Analysis Sheet From Which he can Determine at a Glance the Actual Cost of Operating a Vehicle, Whether or Not a Profit is Being Made and What is a Reasonable Rate to Charge

IN last week's article, I calculated the cost of operating a 32-seater coach and showed that standing charges totalled £17 9s. 3d. per week, while running costs were calculated as 9.61d. per mile.

These figures are just estimates. No doubt they are reasonably near the actual costs, but they are not put forward as being accurate. I cannot emphasize sufficiently the importance of this to the newcomer, for whom these articles are written, for be must take steps himself to discover what are his actual costs of operation, and he must set about keeping records of costs forthwith.

The analysis sheet which accompanies this article is similar to one published in "Cost Recording Made Easy," a publication which can be obtained from "The Commercial Motor," at 2s. 2d., post-free. The analysis sheet in that publication is, however, made out for a 10-ton lorry and 1 have on more than one occasion been asked by readers to prepare one applicable to a passenger-carrying vehicle.

There should be no need for me to draw a separate analysis sheet for passenger vehicles because there is no difference. The items to be recorded are the sante, for nowhere in the analysis sheet is it stated that the revenue is from the carriage of goods. It might just as well be the carriage of passengers.

Compiling an Analysis

However, I think it is a good idea to take advantage of the opportu:tity now presented to deal with the costs of operating passenger vehicles on the same lines, demonstrating to the newcomer how he can record his own expenditure at small cost and with little labour. At first sight, this analysis sheet may seem a formidable document. A certain amount of trouble has to be taken to begin with to ascertain and set down the information given on top of the sheet. Once that part of the work is completed, however, and it should not take more than 10 minutes, it stays unaltered for years This is the wr,y to set about completing that part of the work. The first, second and fourth items, that is, the registered number of the vehicle, its fleet number and make, and whether it is fitted with a petrol or oil-engine, call for no explanation. These can be entered at once.

The third item, "estimated maintenance cost per mile, 1.5d.; per week, £1 *Ss.," is a little more difficult to understand. For the time being, 1 propose to use the figures already given in the previous article. The amount, 1.5d. per mile, is that given for maintenance. (e) . in the article in question. It is an average amount for the type and capacity of vehicle to which the records refer. The oler figure, £.1 5s. per week, is also taken from the previous article and covers maintenance (d) as described therein.

Fixed Data

Next comes "establishment costs." The amount given there, £8 7s. per week, is also taken from the previous article where a method of arriving at this figure was fully discussed and described.

Now turn to the second batch of figures beginning with the description of the vehicle; that, and the cost price, £2,750 need no explanation and call for no calculations. The figures quoted for depreciation are also taken from last week's article.

The final set of figures, which makes up what are described as the standing charges, is likely to cause confusion. The total is only £5 10s. 3d., as compared with the £17 9s. 3d. given in the previous article and quoted in the first paragraph of this one. The difference results from the exclusion of some of the items which normally are treated as standing charges in an estimate of operating costs, but which cannot be so treated without actual running costs. These figures are given in the analysis table proper and wages, omitted from the standing charges, are entered into the analysis proper because they are liable to fluctuate. The actual amounts paid must be entered in the analysis. Then there is that part of depreciation based on time; that is the £3 14s. per week, as already given, and finally there is that part of maintenance (d) which also is entered elsewhere.

Turning now to the 23 columns which comprise the analysis proper, the mileage run is given in column 2, and the quantity of fuel used and its cost, in columns 3 and 4. Lubricating oil, the quantity used and the cost are set down in columns 5 and 6. There is nothing in these items calling for explanation.

What will probably cause the reader a certain amount of thought is that ;n columns 7 and 8 I have two sets of figures relating to tyre costs. In 9, 10, 11, and 12 I have four columns relating to maintenance.

In the case of tyres, column 7 is for the estimated expenditure, whereas the other column, 9, gives the actual expenditure. The newcomer will wonder why both are necessary. The answer is that these cost records are designed to help the operator to decide at once what his costs are. He is, therefore, able to quote appropriate amounts for the charges he is going to make, whether as a fare-per-passenger or for the 'hire of the vehicle as a whole. Only by the use of estimated figures can he obtain that information quickly.

Estimated versus Actual Examination of the figures for tyres shows that, under the heading of "esimated cost," all that is debited in the first week for the use of the vehicle, is 15s. whereas under "actual expenditure," £174 is debited against the week. The sum of £174 is the cost of a complete set of tyres which, the reader will recall, was deducted from the costprice of the vehiele as a preliminary to calculating what the depreciation should be. Now it would be absurd to calculate £174 as being expenditure on tyres for the use of the vehicle for one week. The cost of 120 miles at 1.5d., per mile-15s.-is a fair estimate of the real expenditure on tyres.

Similarly, the maintenance figure, which appears in column 9 under estimated cost" is based on the figures given at the top of the analysis sheet. which state that the estimated cost of maintenance is 1.5d., per mile and £1 5s., per week. The distance run in the first week, 120 miles, at 1.5d., is 15s. To that must be added £1 5s., as the fixed charge per week for maintenance, giving 12 in all. This is entered, and so on all down the length of column 9. In column 10 is given the actual cost of labour required for maintenance, in column 11 the material cost and in column 12 the total cost of maintenance.

It may be advisable to break off here and demonstrate how this cost sheet tallies with the principle set out in last week's article, to the effect that there are 10 items of cost. It will be noted that already ive have dealt with fuel, oil, tyres and maintenance; then come wages and depreciation (column 13), and finally at the top right of the analysis sheet, the four items; tax, insurance, garage rent and interest.

The amounts set down in column 13 for depreciation comprise: (a) depreciation at £3 14s. per week, plus 1.33d. per mile, for the mileage covered during that week. For the first week that is 13s. 4d., which added to 13 14s., gives £4 7s. 4d., as entered.

In column 14 is shown the actual amount of wages paid to the driver. Columns 15 and 16 are devoted to the cost of' employees' insurances. In column 17 the standing charges appear-£5 10s. 3d. per week. The total weekly expenditure which must be calculated, not from the actual figures, but from the estimated ones, is shown in column 18. That is, the total in column 18 is made up of the amounts in columns, 4, 6, 7, 9, 13, 14, 15, 16 and 17. The total for the first week, in which 120 miles were run, is £23 Os. 7d., as set down in column 18.

Checking Costs If the operator wants to know the operating cost per mile-and he should have that information so that he can make a week by week check of the performance of the vehiele-he must divide £23 Os. 7d by 120 miles. The answer, he will find, is 46.06d., as set -down in column 19. 'This is a high figure, of course, because the vehicle has run only a small mileage.

A clearer indication of the reasonable cost per mile can be arrived at if a second set of figures be worked out when the vehicle has run a fair mileage. For example, in the week ending June 14 the vehicle covered 840 miles, so that the cost per mile is only 15.15d.

The amount quoted in column 18 is the net operating cost of the vehicle. There is no provision for establishment costs, which are set down in column 20. The amount, g8 7s. per week, has already been mentioned. Adding that to the vehicle operating costs, gives us the total weekly expenditure which, for the first week, is £31. 7s. 7d. In column 2-2 (revenue per week) I have assumed that the operator is working on the basis of 2s. per mile run. In the first week, the vehicle runs 120 miles, and so the revenue is only £12, compared with a total weekly expenditure (column 21) of £31 7s. 7d. There is, therefore, a loss of £19 7s. 7d. In the week ending June 14, when the vehicle runs 840 miles, the revenue is £84 against a total cost (column 21) of £61 7s. 5d. In that week there is a profit of £22 12s. 7d.

The important point is that there is not a large amount of clerical work in preparing this record of costs, formidable as it may seem. Most of the figures are readily available. First, for example, petrol and oil consumed; this information is nearly always ascertainable from the drivers log sheet, A or at least it should be, as should be the mileage figure. I have shown how to get at the figures for the estimated cost of tyres, maintenance and depreciation. I am quite sure that after the first week or two, the operator, once used to the job, will find that it takes only five or 10 minutes per vehicle to enter the amounts and ascertain the Cost. It is certainly worth the trouble.

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