Is there a better way to charge for bus use between departments that benefits the school division
Question:
Is there a better way to charge for bus use between departments that benefits the school division overall?
The associate superintendent solicited a bid for the trip from Acme Bus Company and it came in at half the cost of using the school division buses; details have been included in Appendix III.
Appendix III
Bus service costs for upcoming training trip
Buses will leave the schools at 8:00 a.m. and return by 6:00 p.m. The actual driving time is three hours each way and the total distance driven will be 300 km.
Bid from Acme Bus Company:
$645 per bus [$1.55/km + $180 per day for the driver ($18 per hour for 10 hours)].
Transfer price from administration department:
$1,548 per bus (300 km at $5.16/km). On average, buses operate for three hours per day.
The $5.16/km rate is based on the following budgetary data:
Garage (Note 1) $166,000
Fuel (Note 2) $216,000
Tires (Note 3) $55,000
Annual insurance $96,750
Drivers (Note 4) $540,000
Bus lease (Note 5) $540,000
Total $1,613,750
Annual KM's in service 312,500
Cost per kilometre $5.16
Notes:
1. The base facility costs $40,000 per year + $14 per bus per day to cover minor repairs, cleanup, and a visual safety inspection (that is, 200 school days 45 buses $14 = $126,000).
2. Buses use an average of $8 of fuel per operating hour (3 hours per day 45 buses 200 days $8 = $216,000).
3. Pursuant to government regulations, bus tires are changed annually.
4. Drivers are paid $20 per hour for regular driving time (double for weekends) and $10 per hour (any day) for waiting.
5. Buses are leased at $12,000 each per year. This amount covers major maintenance.
Canadian Business & the Law
ISBN: 978-0176501624
4th edition
Authors: Dorothy DuPlessis, Shannnon o'Byrne, Steven Enman, Sally Gunz