10 Cardinal Rules of Costing

10 Cardinal Rules of Costing

1.

Paying passenger brackets are based on the maximum capacity of a tour vehicle when the number of paying passengers exceed the capacity of one vehicle, use as many vehicles (of the same capacity) as necessary, determine the aggregate cost of these and divided the amount by the number of paying passengers indicated in the respective passenger bracket.

10 Cardinal Rules of Costing

2. Determine whether the cost of the component is fixed or variable. .

10 Cardinal Rules of Costing

3. All costs paying passenger, free-ofcharge and tour guide are calculated or reduced to a per person cost. Thus, a twin room rate, when divided by two persons becomes a twin-sharing rate

10 Cardinal Rules of Costing

4. Free-of-charge (FOC) costs are calculated by including all meals hotel, restaurants and packed meals entrance fees and non-land transportation costs, such as boat rides, scheduled air transport and similar.

10 Cardinal Rules of Costing

5. When a tour guide accompanies the clients to destinations outside the guides usual place of residence, he/she acts as a tour escorts and therefore, all board and lodging (based on single-room occupancy) costs, plus tour guide fees are to be included in the tour guide costs.

10 Cardinal Rules of Costing

6. When pro-rating the FOC costs by the number of paying passenger brackets, multiply per the FOC cost by the number of FOC entitlements (1 FOC for every 15 full paying participants maximum of 4)

10 Cardinal Rules of Costing

7. When pro-rating tour guide costs by the number of paying passenger brackets, determine the number of tour guides needed to service each vehicle Rule: 1 tour guide per vehicle

10 Cardinal Rules of Costing

8.

When calculating mark up or margin, multiply the total cost by the desired markup percentage. multiply it by .09 (9%) + the 9% = SELLING PRICE

Amount Amount

10 Cardinal Rules of Costing

9.

When calculating the government tax due, divide the net to operator by .88 for 12 % value added tax inclusive

Tax

10 Cardinal Rules of Costing

10.

When calculating the commission due to the client travel management company, divide the total amount due by .9 for 10% commission (10% commission minus 1.00=.9 (net selling rounded off )/.9 = 27,777 ( 2,777)

25000