Sum: 8

Nav Bharat Travel Co. is running 4 buses between Ahmedabad and Mahudi which are at a
distance of 50 kilometres.
Seating capacity of each bus is 40 passengers. Actual passengers carried were 75% of the saving
capacity. All 4 buses ran on all the days of April, 06. Each bus made one round trip per day.

The following particulars were obtained from their books for April, 06 for 4 buses.

Wages of 4 Drivers ₹ 24,000

Office staff Annual salary ₹ 3,84,000
Diesel and Oil ₹ 36,000
Repairs ₹ 20,000
Road Tax and Insurance annual ₹ 96,000
Depreciation Annual ₹ 1,92,000
Interest and other charge Annual ₹ 96,000

Find out the cost per passenger kilometre.

Application of Service Costing in Hotel Industry:

Meaning Hotel costing is a method of ascertaining the cost of providing services by a hotel.
Objectives The objectives of hotel costing are as follows:
(a) To ascertain the operating cost of running a hotel.
(b) To fix the room rent per day on the basis of operating costs.
(c) To fix the hire charges of banquet hall.
Hotel Costing Hotel Costing Procedure involves the following practical steps:
procedure PRACTICAL STEPS INVOLVED IN HOTEL COSTING PROCEDURE
 Step 1: Select the cost Unit as follows:
(a) Per Room Per Day
(b) Per Bed Per Day
Step 2: Calculate the Total Room Days for a particular period.
Effective Room Days = No. of Rooms × Occupancy Rate × No. of Days
Step 3: Calculate Total Fixed costs for a particular period (For Example, Salary
of permanent Staff, Depreciation on Hotel building & Furniture)
Step 4: Calculate Fixed costs per room day as follows:
Total fixed costs (as per step 3)
Fixed costs per room day = Total No.of Room days (as per step 2)
Step 5: Calculate Total Variable Costs (For Example, Cost of Free Tea and
Coffee in the room, Cost of Complementary Breakfast, Cost of Toilet
and Bathroom Supplies, Laundry Cost of Bed Sheets and Towels)
Step 6: Calculate Variable Costs per room day as follows:
Total variable costs (as per step 5)
Variable Costs per room day = Total No.of Room days(as per step 2)
Step 7: Calculate Operating Cost per room day as follows:
A. Fixed Costs per room day xxx
B. Variable Costs per room day xxx
C. Operating cost per room day xxx

FORMAT OF HOTEL SERVICE COST SHEET

Particulars Total (₹) Per Room Day(₹)
A. Fixed Costs (or Standing Charges):
1. Staff Salaries ……… ……….
 2. Room Attendant’s Wages ……… ……….
3. Lighting, Heating & Power ……… ……….
4. Repairs & Maintenance ……… ……….
5. License Fees ……… ……….
6. Interior Decorating & Furnishing ……… ……….
7. Depreciation on Hotel Building & Furniture ……… ……….

Total (A) ………. ………..

B. Variable (Running) Costs:
1. Cost of Free Tea and Coffee in the Room ………. ………..

2. Cost of Complementary Breakfast ………. ………..

3. Cost of Toilet and Bathroom Supplies ………. ………..
4. Laundry Cost of Bed sheets and Towels ………. ………..
Total (B) ………. ………..
C. Operating Cost (A+ B) ………. ………..

Sum: 9
Komal Hotels and Motels Pvt. Ltd. has three types of suits for its customers, viz single room,
double room and three rooms respectively. State the rent to be charged for each type of suite on
the basis of following data:
(a) The number of suits of each type are:
a. Three room suits 20
b. Two room suits 30
c. Single room suits 100
(b) The occupancy of each type of suite is as follows:
Suits Summer Winter
Three room suits 60% 20%
Two room suits 80% 20%
Single room suits 90% 50%
(c) The annual expenses are as follows:
1. Staff salaries ₹ 2,20,000
2. Room attendants wages when occupied
Suits Summer Winter
Three room suits 4 6
Two room suits 3 4.50
Single room suits 2 3
3. Lighting, heating and power for full month when occupied both for summer and winter.
Suits Lighting (₹) Power (₹)
Three room suits 80 42
Two room suits 60 30
Single room suits 40 20
4. Repairs and renovation 37,000
5. Linen etc. 45,000
6. Interior decoration 50,550
7. Sundries 36,000
8. Depreciation:
a) Building @ 5% on ₹14,00,000
b) Furniture @ 10% on ₹ 1,00,000
c) Air conditioner @ 10% on ₹2,00,000
9. Summer may be assumed for 7 months and winter for 5 months in a year. A month may
be taken as of 30 days.
10. Profit including interest on investment @ 25% on cost.
11. The rent of the double room suite is to be fixed as 1.5 times the single room suite and
that of three rooms suite as twice the single room.
Sum: 10 (To find out room rent to be charged)

From the following information relating to a hotel, calculate the room rent to be charged to give
a profit of 25% on cost excluding interest.
(i) Salaries of staff: ₹ 5,11,000 p.a.
(ii) Wages of the room attendant: ₹ 100 per day
There is a room attendant for each room. He is paid wages only when the room is occupied.
(iii) Lighting, Heating and Power
(a) The normal lighting expenses for each room for the whole month is ₹ 500 when
occupied.
(b) Power is used only in winter and the charges are ₹ 200 p.m. for a room, when
occupied.
(iv) Repairs to buildings: ₹ 50,000 p.a.
(v) License etc: ₹ 25,000 p.a.
(vi) Sundries: ₹ 27,000 p.a.
(vii) Interior decoration and furnishing: ₹ 2,50,000 p.a.
(viii) Depreciation @ 5% is to be charged on buildings costing ₹ 20,00,000 and 10% on
equipment(s) of ₹5,00,000.
(ix) Cost of complimentary breakfast and water bottle ₹ 50 per room per day.
(x) Laundry expenses ₹ 2,00,000 p.a.
(xi) There are 100 rooms in the hotel 80% of the rooms are generally occupied in summer and
30% in winter. The period of summer and winter may be considered to be of 6 months in
each case: A month may be assumed of 30 days.