CMA Intermediate · Cost Accounting · Operating Costing - Transport, Hotel and Healthcare
A hotel charges Rs 2,400 per room-day. Its cost per occupied room-day is Rs 1,800 at 75% occupancy, of which Rs 600 is variable. The hotel has 20 rooms operating 30 days. If occupancy rises to 90% and fixed costs stay unchanged, what is the total profit for the month?
Profit is Rs 4,32,000. Fixed cost is Rs 5,40,000, and at 540 occupied room-days contribution of Rs 1,800 each is Rs 9,72,000.
- ARs 2,16,000
- BRs 3,24,000Correct
- CRs 3,78,000
- DRs 4,32,000
Explanation
At 75%, occupied room-days = 20 x 30 x 0.75 = 450. Fixed cost = 450 x 1,200 = Rs 5,40,000. At 90%, occupied = 540. Contribution = 540 x (2,400 - 600) = Rs 9,72,000. Profit = 9,72,000 - 5,40,000 = Rs 4,32,000.
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