Cost for single decker?

Question

Hi,

I was just wondering how the cost for the single decker is calculated considering the following :

Cost per trip = (420k / 300k + 0.5) * 10 + 10,500 / 350 / 10 + 20 * 1 = £61 ?

420k/300k = 1,4 + 0,5 = 1,9 * 10 = 19

10500 / 350 = 30 / 10 = 3

20 * 1 = 20

19+3+20 = 42 ?!

How do you get to 61 (meaning that the dep cost was double counted according to the solution…?)

Unless I missed a key information, I don't understand why it is double counted.

Thanks for your help!

Answer 1

The explanation is wrong but the answer is right. There is a mistake in the first part of the explanation, where a 10 should be a 20.

Cost per trip = (420k / 300k + 0.5) * 20 + 10,500 / 350 / 10 + 20 * 1 = £61 ?

To help you understand, we know that each trip is 20 miles as per exhibit 1. Also, note that fuel per mile is lower in exhibit 2 (0.5 rather than 1)

Depreciation per trip (28) = Depreciation per mile (420/300) mutiplied by miles per trip (20)
Fuel per trip (10) = Fuel cost per mile (0.5) * miles per trip (20)
Insurance per trip (3) = insurance per year (10,500) divided by days a year (350) divided again by trips per day (10). Trips per day is calculated as hours per day (10) divided by hours per trip (1).
Labour cost per trip (20) = Exhibit 1

Total = 28+10+3+20 = 61

If you want some other cases, reach out and I would be happy to point you in the right direction.

Answer 2

Hi there,

I fully agree with Giacomo, a 10 should be a 20, not 10, as stated in the first section of the explanation.

In case you want a more detailed discussion on what case studies to use to best prepare for your upcoming interviews, please feel free to contact me directly.

Best,

Hagen