Total Operating Cost Example

Calculate the total operating cost of a 6x4 truck tractor with a dual axle dropsided trailer.

Assumptions: Usage: long distance transport Payload: 26 tons Purchase Price: Truck tractor: R850 000 Trailer: R145 000 Distance per year: 140 000km Expected Economic life: Truck tractor: 5 years Trailer: 10 years Number of Tyres: Truck tractor: 10 Trailer: 8 Tyre policy (1 set = 8 tyres): Truck tractor: Steering axle: only new tyres Driving axle: 1 set of new tyres and 2 sets of retreads Trailer: 1 set of new tyres and 2 sets of retreads Tyre Prices (per tyre): New: R3 350 Retread: R850 Tyre Life: New: 90 000 km Retread: 80 000 km Residual Value: Truck tractor: 25% of purchase price Trailer: 10% of purchase price Cost of Capital: 16% per year License fee: Truck tractor: R7 632 Trailer: R4 692 Salary: Driver: R6700 per month Assistant: R2700 per month Insurance: R58 000 per year Variable Maintenance: 56 cents/km Overhead Cost: R34 000 per year Working days: 225 Fuel consumption: 57 litre per 100 km Fuel cost: 364 cents per litre Lubricants: 2.5% of fuel costs

Calculate: 1. Total fixed cost per day 2. Variable cost per kilometer 3. Total operating cost per year and, Total operating cost per kilometer 4. The effect on total operating cost per kilometer if the vehicle travels 220 000km per year COST CALCULATION: Example

A: FIXED COST RAND PER JAAR 1 YEAR RAND PER YEAR

1. Depreciation truck tractor Depreciation = (purchase price – tyre price – residual value) / expected life ((R850 000)-(1O * R3350)-( R850 000 * 25%))/ 5 = R120 800 Semi-trailer ((R145 000)-(8 * R3350)-( R145 000 * 10%)) / 10 = R10 370 R131 170

2. Cost of Capital (R850 000 + R145 000) / 2 * 16% R79 600

3. lnsurance R58000

4. Vehicle staff (R6 700 + R2 700) * 12 R112 800

5. Overheads R34 000

6. Licences (R7 632 + R4 692) R12 324

TOTAL FIXED COST PER YEAR R427 893

B: VARIABLE COST CENTS PER KM

1. Fuel (0.57 * 364) 207.48

2. Oil (207.48*2.5%) 5.19

3. Maintenance 56.0

4. Tyres 39.76 ((2 * 3350) / 90 000km)) + (((8 * 3350) + (8 * 850)2) / (90 000+(80 000 * 2)))+(((8 * 3350) + (8 * 850)2)/ (90 000 + (80000*2))) = 0.074 + 0.1616 + 0.1616

VARIABLE COST (CENTS PER KM) 308.43 c/km = 309 c/km

1. Total fixed cost per day: R427 893 / 225 days = R1 901.75 2. Variable cost (cents per km): R3.09 per km or 309 cents per km 3. (a) Total vehicle operating cost (P/Yr): R427 893 + (R3.09 * 140 000km) = R427 893 + R432 600 = R860 493 (b)Total vehicle operating cost (c/km): R860 493/ 140 000km= 615c/km 4. Total vehicle operating cost (c/km) with 220 000 km per year: (R427 893 / 220 000) + R 3.09 = 194c/km + 309 c/km = 503 c/km