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CA Intermediate · Cost and Management Accounting · Service Costing

Lakshmi Hospital's laundry service handled 50,000 kg of linen in a month at a total cost of Rs 2,00,000. The laundry cost is to be charged to wards in proportion to kg of linen washed. The general ward sent 18,000 kg and the ICU sent 7,000 kg. What is the laundry cost charged to the ICU?

The ICU is charged Rs 28,000. The laundry's total cost of Rs 2,00,000 over 50,000 kg gives a rate of Rs 4 per kg, and the ICU's 7,000 kg of linen at that rate comes to Rs 28,000.

  1. ARs 28,000Correct
  2. BRs 72,000
  3. CRs 1,00,000
  4. DRs 40,000

Explanation

Rate per kg = 2,00,000 / 50,000 = Rs 4. ICU charge = 7,000 x 4 = Rs 28,000. Rs 72,000 is the general ward's charge (18,000 x 4), the wrong ward.

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