Mr. Intell newly sets up a Home Stay in Hanle, Ladakh offering two types of room, single and double. The expected occupancy percentage for the rooms…
CA Intermediate · Cost and Management Accounting · RTP · May 2025
Mr. Intell newly sets up a Home Stay in Hanle, Ladakh offering two types of room, single and double. The expected occupancy percentage for the rooms is provided below: Type of rooms Number Occupancy percentage Single 20 100% Double 10 80% The details of the expenses as forecasted are provided below: Particulars (₹) Staff salaries 30,20,000 Food and beverage costs 20,16,000 Lighting and power 8,60,000 Repairs and renovation 4,94,000 Laundry charges 3,22,000 Building rent 14,40,000 Miscellaneous expenses 6,12,000 Room attendants to be paid @125 per room day. Mr. Intell knowing about the power cut during nights at Hanle to preserve the natural light for astronomical research, sets up emergency power backup, being charged from the customers separately @200 per room, if requested. The rent of the double room is to be fixed at 1.5 times the single room. In the month of June, Mr. Matrix along with his family visited Hanle Dark Sky Reserve to experience the breathtaking view of the stars. For one night stay at the place, he approached Mr. Intell to book a double bedroom and also requested for emergency power backup at night. You are required to CALCULATE the rent to be charged from Mr. Matrix, considering the profit @ 25% on total taking. (Assume 360 days in a year for calculation purpose.)
Suggested Answer and Working Notes:
Working Notes: Total equivalent single rooms Nature of room Occupancy (Room-days) Equivalent single rooms (Room-days) Single room 7,200 (20 rooms × 360 days × 100%) 7,200 (7,200 × 1) Double rooms 2,880 (10 rooms × 360 days × 80%) 4,320 (2,880 × 1.5) Total 10,080 11,520 Statement of total cost Particulars (₹) Staff salaries 30,20,000 Room attendant's wages (125per Room Day for 10,080 Room Days) 12,60,000 Food and beverage costs 20,16,000 Lighting and power 8,60,000 Repairs and renovation 4,94,000 Laundry charges 3,22,000 Building rent 14,40,000 Miscellaneous expenses 6,12,000 Total cost 1,00,24,000 Profit is 25% on total taking ∴ Total taking = 1,00,24,000 + 25% of total taking Let R be rent for single room Then 11,520 R = 1,00,24,000 + (0.25 × 11,520 R) Or, 8,640 R = 1,00,24,000 Or, R = 1,160 (approx.) Rent to be charged for single room = 1,160 Rent for double room - 1,160 × 1.5 = 1,740 Rent to be charged from Mr. Matrix Particulars ₹ Double room rent 1,740 Add: Power backup charges 200 Total 1,940
Topics: Service Costing
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