CA Intermediate · Cost and Management Accounting · Service Costing
A hospital in Pune measures the cost of its in-patient ward using a composite cost unit. Which of the following is the most appropriate cost unit for this purpose?
The appropriate cost unit is the patient-day. A hospital incurs ward costs for each day a patient occupies a bed, so cost per patient-day measures service delivered. Kilometre-based units are used in transport undertakings, not in hospitals.
- APatient-dayCorrect
- BBed-kilometre
- CPassenger-kilometre
- DTonne-kilometre
Explanation
Hospitals commonly use patient-days (or bed-days) as the cost unit for ward costs, because cost is incurred for each day a patient occupies a bed. The other units belong to transport costing: tonne-km to goods transport, passenger-km to passenger transport.
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