Page 20 - DCOM206_COST_ACCOUNTING_II

Unit 1: Service Costing

Problem 6: Notes
Gwalior Hospital runs an intensive medical care unit. For this purpose, it has hired a building at
a rent of ` 30,000 p.m. with the understanding that it would bear the repairs and maintenance
charges also.
The unit consists of 25 beds and 5 more beds can be comfortably accommodated when the
occasion demands. The permanent staffs attached to the intensive medial care unit are as follows:
Doctor’s fee ` 6,000 p.m.
Salary to 4 Supervisors ` 800 p.m. each
Salary to 6 Nurses ` 500 p.m. each

Salary to 4 Ward boys ` 300 p.m.
The unit is open for patients all the 365 days, scrutiny of accounts reveals that only for 120 days
in the year, the unit has the full capacity of 25 patients per day and for another 80 days, it has on
an average 20 beds only occupied per day in the year. But, there are occasions when the beds are
full in the year. Extra beds are hired at a charge of ` 4 per day-per bed and this does not come to
more than 5 beds extra above the normal capacity on any day. The total hire charge for the extra
beds incurred for the whole year amounts to ` 5,000. The other expenses for the year are as
follows:
Repairs ` 16,000
Medicines ` 50,000

Food to patients ` 65,000
Expenses on Oxygen, X-ray ` 65,000
Expense of generator ` 24,000
Laundry charges ` 41,600

Administration expenses ` 50,000
If the unit recovers an overall amount of ` 200 per day on an average from each patient, what is
the profit per patient day made by the unit?

Solution:
Statement of Cost and Profit for Gwalior Hospital
Particulars Amount (`)
(A) Earnings:
Income received (5,850 × 200) 11,70,000
Total 11,70,000
(B) Fixed Charges:
Staff salaries : (4 × 800) + (6 × 500) + (4 × 300) × 12 88,800
Rent ( 30,000 × 12) 3,60,000
Repairs 16,000
Administration expenses 50,000
Cost of Oxygen, X-ray 65,000
Total 5,79,800
(C) Variable Costs:
Contd...
Food to patients 65,000
Expenses of generator 24,000
Laundry charge 41,600
Medicines 50,000
LOVELY PROFESSIONAL UNIVERSITY 15
Doctor’s Fee (6,000 × 12) 72,000
Hire Charges for Extra Beds 5,000
Total 2,57,600
(D) Total Cost of Hospital ( B+C) 8,37,400
(E) Profit (A - D) i.e. 11,70,000–8,37,4000 3,32,600
3,32,600 59.00
(F) Profit per patient day = = 56.854 or ` 59 (approx.)
5,850