CAF-5 · Chapter 6 · Question 10 of 10
A hotel operates 80 standard twin-bedded rooms and is fully occupied for 350 days a year. The total running costs for the year are Rs. 3,360,000. Which of the following would be the most appropriate and useful composite cost unit for this service business?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Cost per room/day
Explanation
In service costing, finding a logical unit cost is challenging. For a hotel, the text provides the example that the most useful composite measure of the cost of providing the service is the "cost per room/day".
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