SOLVING THE PROBLEMS OF THE CARRIER
Page 37
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I do not make provision for recording actual establishment costs in this chart, as they are too numerous.
I shall show, in subsequent articles, how to arrive at the actual figures for expenditure on tyres, maintenance and establishment costs. For the time being I am going to ignore that part of the analysis sheet and deal only with estimated figures, for those are all that are available in the early months of the operator's experience. I shall also show how to keep records of fuel and oil used. For the time being I will assume that the operator checks these figures as well as those for mileage, direct from the driver's log sheets, which, in the majority of cases, embody provision for the entry of mileage run and fuel and lubricating oil used.
Now, this vehicle, purchaed on October 20, 1945, was actually put into service on Monday, October 29, and the first week for which the records are compiled is that ended November 3, when the vehicle ran 832 miles. In that week 70 gallons of fuel, costing £6 14s. 2d., were consumed, and
gallon of lubricating .oil at 3s. 9d. These are straightforward entries which any operator can make.
Now we come to tyres, the estimated cost of which is lid. per mile, and the total cost for 832 miles is £5 4s. What
mean is that in running those 832 miles the vehicle has used £5 4s. worth of tyres, and the operator must include that amount in his costs.
Similarly, with estimated maintenance costs, 832 miles at lid. represent £4 6s. 8d. Actually, the operator may have spent little or nothing on maintenance work during that week, and what we are doing is to put a contribution of £4 6s. 8d. towards future expenditure.
Interpreting Depreciation So, again, with depreciation at 1.62d. per mile; for 832 miles the amount is £5 12s. 4d. That can be interpreted as being the value of the wear and tear which the vehicle has suffered in running those 832 miles. It can also be regarded as a contribution towards the purchase of a new vehicle when the present one is worn out. The wise operator, especially the one whose capital is limited, will put that sum away, as well as the amounts for maintenance and tyres, so that it will be available when the major expenses occur.
Wages, it will be seen, cover three columns, Nos. 14, 15 and 16. The first is for the entry of the actual amount paid to the driver in that week, which happens to be £5 12s. 9d.; the second is for the employer's contribution on account of National Insurance, Is. 10d., and the third for the proper proportion of what he pays his insurance company to cover himself against liability for accident to his driver, and I have assessed that sum at Is. 2d. per week.
Finally, in these vehicle-operating costs, we come to column 17, "Standing Charges," and there is entered each week the £6 16s. 2d. which has been calculated and set down at the right-hand top corner of the sheet.
It is now necessary to total these vehicle-operating costs by adding the amounts in columns 4, 6, 7, 9, 13, 14, 15, 16 and 17. The total is £34 12s, 10d., as set down in column 18.
If the operator wants to know the operating cost per mile -and he should have that information so that he can check, week by week, the performance of the vehicle-he must divide £34 12s. 10d. by 832 miles. If he does so, he will find the answer to be the 9.99d. set down in column 19.
Up to now I have dealt, as I said must be done, only with vehicle-operating costs, regarding them as being something
separate. There is still, however, an important item of expense, a sort of collective item, covering a multitude of small ones, and that is establishment costs. I have tentatively agreed these with the operator as being £3 17s. 6d., although I am sure, and shall show ultimately, that that is a serious under-estimate. That amount must be added to the figure of £34 12s. 10d. for vehicle-operating costs to give us the £38 10s. 4d. weekly expenditure {column 21).
Assessing Profit In column 22 is recorded the revenue earned by the vehicle in the week, and in 23 the balance, profit or loss, obtained by subtracting the amount of the weekly expenditure in column 21 from that of the weekly revenue in column 22. The result shows a profit of £5 17s. 11d, from the operation of the vehicle during the week-an insufficient profit, but that is by the way.
No operator can claim that there is a large amount of clerical work in preparing the record of costs. Even if it gives a little difficulty for the first week or two, he will soon " get into it" and find that five or ten minutes per vehicle at the most is all that is needed each week to do the work.
Now I must turn to the method of arriving at the figures for actual cost, as distinct from estimated cost As a preliminary. starting at the left-hand side of the sheet, I will deal with the problem of ascertaining the consumption of fuel and lubricants.
For most operators it will probably be sufficient to take those figures from the driver's log sheet. They have to be completed in any event, so that I am not imposing any additional burden of clerical work on the operator in keeping his records pp to date. Not all log sheets contain provision for this record, and I must, therefore, recommend that the operator makes use of forms that provide for that entry. An example is reproduced with this article. It makes provision at the right-hand top corner for fuel and oil consumption and driver's expenses. and, just below, for the speedometer readings at the start and finish of the day, and the day's mileage.
Of course, in a fleet of any size some further check on the issue of petrol, oil fuel, lubricants and so on is most desirable, and in the next article I shall suggest means for recording these issues. S.T.R.