Identify the three classifications of operating costs in a transport undertaking.

The three classifications are standing or fixed charges, maintenance charges, and operating and running charges.

Fill in the blank: The cost of carrying a defined quantity of goods over a specific distance is determined through ___ costing.

Service

True or False: Fixed costs in a transport service do not vary with the kilometers run.

True

What is the significance of selecting the correct cost unit in transport costing?

Selecting the correct cost unit is crucial.

• Ensures accurate cost calculation.

• Considers distance and load factors.

• Affects pricing and profitability.

How is the absolute tonne-km calculated in transport costing?

Absolute tonne-km is calculated by summing the products of the distance traveled and the weight carried for each part of the journey.

Short Answer: What are the common objectives of transport costing?

Common objectives of transport costing

• Determine carrying costs effectively.

• Set competitive prices or fares.

• Aid management in decision-making.

Fill in the blank: In transport costing, maintenance charges are considered ___ costs.

Variable

What is the formula to calculate commercial tonne-km?

Commercial tonne-km is calculated by multiplying the total distance traveled by the average load quantity carried during that trip.

True or False: The costs associated with operating a canteen are irrelevant to service costing.

False. The costs of materials, labor, and other overheads are essential for determining the service costing of a canteen.

Identify one fixed cost and one variable cost associated with hotel costing.

A fixed cost example is staff salaries, while a variable cost example is electricity charges.