When a company provides staff pick up and drop off service at cost, what the parameters to be considered in calculating the cost of service per kilometer run of vehicle?

This is a very interesting question and may be calculated as follows:

Assumptions:

1.       The total Kilometer (KM) run of the vehicle, say, KM during life time (5 years or so) of the vehicle.

2.       Total investment cost = Purchase price of vehicle minus expected salvage value at the end of the life period. Say this is “X”

3.       The vehicle remain on standby for office works during office hours and works for pick up and drop off before and after office hours. So, only overtime of driver is charged for pick up and drop off services.

4.       A vehicle is used to pick up several staff members (say6) from a designated point or from door to door depending on road network and convenience.

5.       Assume fuel consumption@8 KM per liter or at actual, and calculate approx. Total fuel cost for, KM run. Say this is “Y”

6.       Estimate Total maintenance cost including regular servicing, tire, battery, brake replacement, yearly tax and other maintenance cost for, KM run. Say this is “Z”

7.       For simplicity, each Staff member shall have to pay equal amount irrespective of the distance travelled. You may use% admin. overhead or you may leave it, as appropriate.

Calculation:

A.      Cost per Kilometer (KM) run of the vehicle= (X+Y+Z)/,.  Let us say this as “P”

B.      Driver’s overtime, say:  2 hours per day and Total monthly overtime hours =2x= hours.  Then calculate total monthly overtime cost (total hours x overtime rate/hour). Let us say driver’s total monthly overtime cost is  “Q”

C.      Let us assume6 Staffs use the pickup  and drop off service in a single Minivan (7 Seater) and distance travelled for pick up and drop off service is  “R” KM per month (up and down travel of the vehicle per trip x two trips per day xdays)

D.      Now cost per month per staff member= (PxR+Q)/6

Remarks: The above calculation is heavily dependent on driver’s monthly overtime cost, total KM run per month for pickup and drop off and assumption of total KM run (, KM) of the vehicle during its lifetime. In standard conditions, when6 staffs are using the vehicle, you may get a figure in between USD and USD or so per month per staff member in Asian and African Context. 

.8 kilo meters X2 =.6 kilometre per day  x working days is =1,.6 kilo meters per one month,