Fit'n'fine Ltd. runs a fitness club in Delhi. It offers three types of membership plans: Bronze, Silver, and Gold. The club is using a traditional…
CA Intermediate · Cost and Management Accounting · RTP · May 2026
Fit'n'fine Ltd. runs a fitness club in Delhi. It offers three types of membership plans: Bronze, Silver, and Gold. The club is using a traditional costing system with the following information: Cost Information Description Amount (in ₹) Rent 1,00,000 per month Gym equipments 30,00,000 (service life 5 years) Licenses & Permits 86,000 (renewed in every six month) Insurance 12,000 per annum Salary to the instructors 7,48,000 per annum Utilities 75,000 per quarter Cleaning supplies 1,44,000 per annum AMC of equipments & machinery 1,20,000 per month Marketing expenses 3,00,000 per annum Electricity expenses @14 per unit April to July – 60 units per hour August to March – 25 units per hour Membership Details Type of Members Club Access time Occupancy % (April to July) Occupancy % (August to March) Gold 5.00 AM to 9.00 AM 100% 80% Silver 6.00 PM to 9.00 PM 70% 50% Bronze 9.00 AM to 6.00 PM 50% 30% The maximum capacity of the fitness club is 200 persons in any time slot. The membership fee per month for Gold members is to be fixed at 1.5 times of the Silver membership and that of Silver membership as twice of the Bronze membership fee after providing profit @ 25% on membership fees. The club opens 25 days in a month. You are required to calculate the membership fee per month to be charged by the club for each member type.
Suggested Answer and Working Notes:
Statement showing Total Cost per annum Particulars Amount (₹) Rent (1,00,000 × 12) 12,00,000 Depreciation on Gym Equipment (30,00,000 / 5) 6,00,000 Licenses & Permits (86,000 × 2) 1,72,000 Insurance 12,000 Salary to the instructors 7,48,000 Utilities (75,000 × 4) 3,00,000 Cleaning supplies 1,44,000 AMC of Equipment & Machinery (1,20,000 × 12) 14,40,000 Marketing expenses 3,00,000 Electricity Expenses April to July (25 days × 16 Hrs × 4 Month × 60 units × 14) 13,44,000 Electricity Expenses August to March (25 days × 16 Hrs × 8 Month × 25 units × 14) 11,20,000 Total cost per annum 73,80,000 Add: Profit 25% on sale or 1/3 on cost 24,60,000 Total amount to be charged 98,40,000 Calculation of per member per month Subscription charges: Total amount to be charged = 98,40,000 Equivalent Bronze membership = 9,840 Rate per Bronze membership per month = 98,40,000 / 9,840 = 1,000 Rate per Silver membership per month = 1,000 × 2 = 2,000 Rate per Gold membership per month = 2,000 × 1.5 = 3,000 Working note: Calculation of equivalent Bronze membership: Type of Membership April to July August to March Gold 200 x 100% = 200 200 x 80% = 160 Silver 200 x 70% = 140 200 x 50% = 100 Bronze 200 x 50% = 100 200 x 30% = 60 Equivalent membership: Type of Membership April to July August to March Gold 3 x 200 = 600 3 x 160 = 480 Silver 2 x 140 = 280 2 x 100 = 200 Bronze 1 x 100 = 100 1 x 60 = 60 Total 980 x 4 = 3,920 740 x 8 = 5,920 Total = 3,920 + 5,920 = 9,840
Topics: Service Costing
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