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3rd/4th Sem Hotel Accountancy Notes

Basis of allocation: Departmental Accounting

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Last updated: 30 January 2025

Different basis of allocation

Sl No.CostBasis of Allocation
1Interest(i) Total Capital Employed in the Department
(ii) Square feet of the area occupied
(iii) Ratio to Sales
2Insurance(i) Square feet of the area occupied
(ii) The total value of each asset
3Taxes(i) Ratio to sales
(ii) Basis of tax
4Rent(i) Ratio to sales
(ii) Square feet of area occupied
(iii) No of hours of operation
5Depreciation(i) Square feet of area occupied (building)
(ii) Value of the asset
(iii) Life of the asset
6Telephone(i) Dept. Metered Usage
(ii) No. of extension sanctioned
(iii) Ratio to sales
7Employee’s Benefit(i) No. of employees
(ii) Refer to payroll record
8Advertisement(i) Ratio to sales
9Light & Power(i) No. of light/power points
(ii) Cubic feet of area occupied
(iii) No of hours dept. operate
(iv) Ratio to sales

The above-mentioned basis of allocation are some of the basis recommended but a management may adopt altogether a different base for allocation of indirect cost to the different department.

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Syllabus BHM206

01 Uniform System of Accounts for Hotels

  1. Introduction to Uniform system of accounts
  2. Contents of the Income Statement
  3. Practical Problems
  4. Contents of the Balance Sheet (under uniform system)
  5. Practical problems
  6. Departmental Income Statements and Expense statements (Schedules 1 to 16)
  7. Practical problems

02 Internal Control

  1. Definition and objectives of Internal Control
  2. Characteristics of Internal Control
  3. Implementation and Review of Internal Control

03 Internal Audit and Statutory Audit

  1. An introduction to Internal and Statutory Audit
  2. Distinction between Internal Audit and Statutory Audit
  3. Implementation and Review of internal audit

04 Departmental Accounting

  1. An introduction to departmental accounting
  2. Allocation and apportionment of expenses
  3. Advantages of allocation
  4. Draw-backs of allocation
  5. Basis of allocation
  6. Practical problems