Service costing

In icai material has 6 th illustration was the equation have 2641000+25%(5%+20%) of total taking .. I not understand the logic reason behind it...for the equation..



CA Inter


15-Jul-20 20:28


Answers (2)

In the given equation, 2641000 is the total of all the expenses including building rent (Building rent is Rs.1,20,000 and other expenses Rs.25,21,000) Coming to 25%, 5% is the additional amount payable apart from the monthly rent to the building taken on hire and 20% is the profit to be received in the business. So the total amount receivable by renting the rooms to maintain the profit will be Rs.26,41,000 + (25% of rent received). This will be the amount to be received by renting the rooms. Since we do not know the room rent's, we take 1,04,400 (as per working note 1 in the solution) x R (assumed rent) = Rs.26,41,000 + (25% x 1,04,400 R (Total rent received)).

Madhuri Veluri

Madhuri Veluri


16-Jul-20 10:51