Mr Harry is a travelling inspector for the Environment Protection Agency. He uses his own car and the agency reimburses him at Rs. 1.80 per km. Mr Harry claims that he needs Rs. 2.20 per km just to breakeven. A scrutiny of his expenses by the agency reveals the following:
|
Oil change every 4,800 km |
120 |
|
Maintenance (other than oil) |
1,800 |
|
every 9,600 km |
|
|
Yearly insurance (comprehensive |
4,000 |
|
with accident benefits) |
|
|
Cost of car, with an average |
1,08,000 |
|
residual value of Rs. 60,000 and |
|
|
with a useful life of 3 years |
Petrol is Rs. 5 a litre and Harry gets 8 km a litre in his car. When Harry is on the road, he averages 192 km a day. He works 5 days in a week, has 10 vacations in a year, besides 6 holidays, and spends 15 working days a month in the office. You are required to determine
- An equitable rate of reimbursement on the basis of schedule he presently follows and
- The number of kilometres a year he would have to travel to break-even at the current rate of reimbursement