Page 22 - DCOM206_COST_ACCOUNTING_II

Unit 1: Service Costing

Administrative overheads ` 10,000 Notes
Hire for print ` 1,00,000
Other expenses ` 5,000
The premises are valued at ` 6,00,000 and its estimated life is 10 years. Projector and other
equipments cost ` 2,00,000 on which 10% depreciation is to be charged. Daily three shows are
run throughout the year. Total capacity is 500 seats which are divided into three classes as
follows:
Third class 250 seats
Second class 150 seats
First class 100 seats
Ascertain cost per man show assuming that:

(a) 20% of the total seats remain vacant, and
(b) Weightage to be given to these classes in to the ration of 1:2:3
Determined the rate for each class if the management expects 33.33 % return on gross proceeds.
Ignore entertainment taxes.

Solution:
Statement of Operating Cost of Kazal Cinema for the year ended 31st March, 2008
Particulars Amount (`)
(A) Standing Charges:
Manager’s Salary (` 5,000 × 12) 60,000
Gate Keeper’s Salary (` 800 × 10 × 12) 96,000
Operator’s Salary (` 1,200 × 4 × 12) 57,600
Clerk’s Salary (1,500 × 6 × 12) 1,08,000
Administration Overheads 10,000
Depreciation on Premises @ 10% on 6,00,000 60,000
Depreciation on Machinery @ 10% on 2,00,000 20,000
Total 4,11,600
(B) Variable Charges:
Power 20,000
Stationery 5,000
Advertisement 30,000
Hire for Print 1,00,000
Other expenses 5,000
Total 1,60,000
(C) Total Operating Cost of Cinema (A +B) 5,71,600
(3)
(D) Total No. of Man-Shows 8,10,300
(E) Cost per man-show = 5,71,600 ÷ 8,10,300 = 0.7054 0.7054

Working notes:
(1) Capacity used of cinema:
Third class = 250 × 80% = 200 seats
Second class = 150 × 80% = 120 seats

First class = 100 × 80% = 80 seats

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