Question

You are the newly appointed transport manager for Super Trucking (Pty) Ltd, which operates as a logistics service provider for various industries throughout southern Africa. One of these vehicles is a 4x2 Rigid Truck and drawbar trailer that covers 48,000 km per year. Use the assumptions below to answer the following questions (show all calculations): Overheads R 176,200 Cost of capital (% of purchase price per annum) 11.25% Annual License Fees—Truck R 16,100 Driver Monthly cost R 18,700 Assistant Monthly cost R 10,500 Purchase price: - Truck R 1,130,000 Depreciation: straight line method Truck residual value 25% Truck economic life (years) 5 Purchase price: Trailer R 370,000 Tyre usage and cost (c/km) 127 Trailer residual value 0% Trailer economic life (years) 10 Annual License Fees—Trailer R 7,700 Fuel consumption (liters/100km) 22 Fuel price (c/liter) 2053 Insurance (% of cost price) 7.5% Maintenance cost (c/km) 105 Distance travelled per year (km) 48000 Truck (tyres) 6 Trailer (tyres) 8 New tyre price (each) R 13,400 Lubricants (% of fuel cost) 2.5% Working weeks 50 Working days 5 days / week Profit margin 25% VAT 15% Q1. Calculate the annual total vehicle costs (TVC)

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Neal

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To calculate the annual total vehicle costs (TVC), we need to add up all the costs associated with the truck and trailer. Here are the calculations:
Truck costs:
Depreciation: The purchase price of the truck is R 1,130,000, and the residual value is 25%. Therefore, the depreciation per year is (1,130,000 * (1 - 0.25)) / 5 = R 678,000.
Interest: The cost of capital is 11.25% of the purchase price per annum. Therefore, the interest per year is 0.1125 * 1,130,000 = R 127,125.
License fees: The annual license fees for the truck are R 16,100.
Driver cost: The monthly driver cost is R 18,700, which translates to an annual cost of 18,700 * 12 = R 224,400.
Assistant cost: The monthly assistant cost is R 10,500, which translates to an annual cost of 10,500 * 12 = R 126,000.
Tyre cost: The cost of tyres per km is 127 cents. The truck travels 48,000 km per year, and it has 6 tyres. Therefore, the total tyre cost per year is 127 * 48,000 * 6 = R 36,864.
Maintenance cost: The maintenance cost per km is 105 cents. The truck travels 48,000 km per year. Therefore, the total maintenance cost per year is 105 * 48,000 = R 5,040.
The total cost of the truck per year is:
678,000 + 127,125 + 16,100 + 224,400 + 126,000 + 36,864 + 5,040 = R 1,213,529
Trailer costs:
Depreciation: The purchase price of the trailer is R 370,000, and the residual value is 0%. Therefore, the depreciation per year is (370,000 * (1 - 0)) / 10 = R 37,000.
License fees: The annual license fees for the trailer are R 7,700.
Tyre cost: The cost of tyres per km is 127 cents. The trailer travels 48,000 km per year, and it has 8 tyres. Therefore, the total tyre cost per year is 127 * 48,000 * 8 = R 48,768.
Maintenance cost: The maintenance cost per km is 105 cents. The trailer travels 48,000 km per year. Therefore, the total maintenance cost per year is 105 * 48,000 = R 5,040.
The total cost of the trailer per year is:
37,000 + 7,700 + 48,768 + 5,040 = R 98,508
Therefore, the annual total vehicle costs (TVC) is:
1,213,529 + 98,508 = R 1,312,037
Hence, the annual total vehicle costs (TVC) is R 1,312,037

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