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CA Intermediate · Cost and Management Accounting · Service Costing

Sagar Hospital runs a 50-bed ward. Operating costs for a month of 30 days are Rs 6,75,000. The ward was occupied at 60% of its bed capacity throughout the month. What is the cost per occupied bed-day?

Cost per occupied bed-day is Rs 750. Available bed-days are 50 x 30 = 1,500, and at 60% occupancy the occupied bed-days are 900. Dividing Rs 6,75,000 by 900 gives Rs 750. Using available bed-days would wrongly give Rs 450.

  1. ARs 450Correct
  2. BRs 750
  3. CRs 225
  4. DRs 540

Explanation

Available bed-days = 50 x 30 = 1,500. Occupied bed-days = 60% x 1,500 = 900. Cost per occupied bed-day = 6,75,000 / 900 = Rs 750. Rs 450 is wrong because it divides by the 1,500 available bed-days, not by occupied days.

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