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How to avoid getting rate quotes in a twist

22nd August 1975, Page 37
22nd August 1975
Page 37
Page 38
Page 37, 22nd August 1975 — How to avoid getting rate quotes in a twist
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Which of the following most accurately describes the problem?

Monitoring

Thus, there should be a constant monitoring of the weekly mileage to confirm that the target on which the firSt rates quotation was made is being maintained. Any large deviation from the original figure should be followed by a fresh approach to the customer.

A quotation based on a time and mileage basis is far safer provided the customer will accept a quotation in these terms. The same job calculated in this manner would be represented by a weekly cost of £323.50 and a weekly revenue of £451.92 estimated as follows. The cost calculation is 60 hours at £2.35 an hour equals £141.00 plus a mileage charge of 1,200 at 15.21p a mile, or £182.50, totalling £323.50.

The charge is calculated as 60 hours at £3.29 equals £197.40, plus 1,200 miles at 21.21p a mile, £254.52, a :total of E451.92. This charge is arrived at, of course, by adding 20 per cent for overheads and 20 per cent for profit and contingency to the costs.

The surplus of revenue over expenditure which results from the time and mileage calculation is, therefor, £128.42—again an acceptable proposition. .ere are three possible itions in the factors inN:1 in these two calcula; a variation in hours pied on the job, a reducor increase in mileage, and rnbination of both circum2es.

' course, an increase in ige can react to the hauladvantage we should consider that only variation in mileage h should alert an operator he need for action is a ficant reduction in mileage • a rates quotation is made. ng a possible increase in s employed first, the result be shown of an increase I 60 to 80 hours while the age remains constant, as ws.

ie time cost becomes 80 's at £2.35 equalling £187.00 e the mileage cost remains 182.50, totalling together ■ .50. When this is deducted the original quotation of .92 for the week's work £82.42 remains. This reents only 22 per cent re on outlay again in place the total of 40 per cent inally imposed to cover 'heads and profit and conency.

pristant •hours employed a reduction in mileage can actually react to the benefit of the operator using this method of quotation. This can be demonstrated when to the cost of 60 hours work (E141) is added 800 miles at 15.21p a mile (E121.68), giving a total cost per week of £262.68.

Deducting this from the original quotation of £451.92 a week gives a surplus of revenue over expenditure of £189.24, some £61 more than the surplus quoted for. The reduction in mileage can even compensate for an increase in -hours. For instance, if the hours 'increase from 60 to 80 and the mileage decreases from 1,200 to 800, the operator will still be in pocket.

The calculation is 80 hours at £2.35 equals £187.00, and 800 miles at 15.21p a mile equals £121.68, together 'totalling £308.68. Deducted from the quotation £451.92 a week this gives a surplus of revenue over expenditure of £143.24 or some £15 better than 'originally quoted for. ,

Mileage watch

From these calculations it can be seen that the time and mileage quotation is more satisfactory from the operator's point of view. The variation in mileage is so critical in quoting on a total operating cost per mile basis that only the most rigorous watch on weekly mileage will prevent a serious loss.

Quoting on the time and mileage basis, however, only a significant -hours variation will affect the revenue position critically enough to cause alarm; a factor Which will quickly show up on drivers' log sheets and be discovered in the ordinary course of routine logsheet examination.

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