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In a garima factory the machine of a department costs ₹11500 . It is expected that it will work for 20000 hours and its scrap value is estimated at ₹1500. The rent of factory department is ₹400 per month and 25%of the area of department is utilised for conducting the operation of the machine. One foreman and an attendant are employed on a salary of ₹200and ₹100 per month . respectively , to work on one more machine of a similar type . The expenses of the month incurred in the department are as follows :Light charges for the department ₹80; having 16 points in all out of which only 4 points are used at this machine . Total power used for two machines of equal horse-power ₹320 ; Indirect labour for the machine ₹50 and repairs and renewals ₹40. You are required to find out the machine hour rate for one month when it is expected to work for 40 hours a week
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In a garima factory the machine of a department costs ₹11500 . It is e...
Machine Hour Rate Calculation

Machine Hour Rate is a technique used to determine the cost of running a machine for an hour. It helps in calculating the cost of production and setting the selling price for the product. Here is how we can calculate the Machine Hour Rate for the given scenario:


Direct Expenses


  • Cost of Machine = ₹11,500

  • Scrap Value of Machine = ₹1,500

  • Expected Working Hours = 20,000

  • Depreciation per Hour = (Cost of Machine - Scrap Value) / Expected Working Hours

  • Depreciation per Hour = (11,500 - 1,500) / 20,000 = ₹0.50



Indirect Expenses


  • Rent for Department = ₹400 per month

  • 25% of Area for Machine Operation

  • Monthly Area Cost = Rent * (25/100) = ₹100

  • Salary of Foreman = ₹200 per month

  • Salary of Attendant = ₹100 per month

  • Total Indirect Expenses = Monthly Area Cost + Salary of Foreman + Salary of Attendant

  • Total Indirect Expenses = 100 + 200 + 100 = ₹400



Other Expenses


  • Light Charges for Department = ₹80 per month

  • Power Consumption for Machine = 4/16 * ₹320 = ₹80 per month

  • Indirect Labour for Machine = ₹50 per month

  • Repairs and Renewals = ₹40 per month

  • Total Other Expenses = Light Charges + Power Consumption + Indirect Labour + Repairs and Renewals

  • Total Other Expenses = 80 + 80 + 50 + 40 = ₹250



Total Cost


  • Total Cost per Hour = Direct Expenses per Hour + Indirect Expenses per Hour + Other Expenses per Hour

  • Total Cost per Hour = ₹0.50 + ₹20 + ₹6.25

  • Total Cost per Hour = ₹26.75



Machine Hour Rate


  • Machine Hour Rate = Total Cost per Hour / Expected Working Hours per Month

  • Machine Hour Rate = 26.75 / (40 * 4) = ₹0.168



Conclusion

Therefore, the Machine Hour Rate for the given scenario is ₹0.168 per hour. This will help in determining the cost of production and setting the selling price for the product.
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In a garima factory the machine of a department costs ₹11500 . It is expected that it will work for 20000 hours and its scrap value is estimated at ₹1500. The rent of factory department is ₹400 per month and 25%of the area of department is utilised for conducting the operation of the machine. One foreman and an attendant are employed on a salary of ₹200and ₹100 per month . respectively , to work on one more machine of a similar type . The expenses of the month incurred in the department are as follows :Light charges for the department ₹80; having 16 points in all out of which only 4 points are used at this machine . Total power used for two machines of equal horse-power ₹320 ; Indirect labour for the machine ₹50 and repairs and renewals ₹40. You are required to find out the machine hour rate for one month when it is expected to work for 40 hours a week Related: Machine Hour Rate - Overheads, Cost Accounting?
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In a garima factory the machine of a department costs ₹11500 . It is expected that it will work for 20000 hours and its scrap value is estimated at ₹1500. The rent of factory department is ₹400 per month and 25%of the area of department is utilised for conducting the operation of the machine. One foreman and an attendant are employed on a salary of ₹200and ₹100 per month . respectively , to work on one more machine of a similar type . The expenses of the month incurred in the department are as follows :Light charges for the department ₹80; having 16 points in all out of which only 4 points are used at this machine . Total power used for two machines of equal horse-power ₹320 ; Indirect labour for the machine ₹50 and repairs and renewals ₹40. You are required to find out the machine hour rate for one month when it is expected to work for 40 hours a week Related: Machine Hour Rate - Overheads, Cost Accounting? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about In a garima factory the machine of a department costs ₹11500 . It is expected that it will work for 20000 hours and its scrap value is estimated at ₹1500. The rent of factory department is ₹400 per month and 25%of the area of department is utilised for conducting the operation of the machine. One foreman and an attendant are employed on a salary of ₹200and ₹100 per month . respectively , to work on one more machine of a similar type . The expenses of the month incurred in the department are as follows :Light charges for the department ₹80; having 16 points in all out of which only 4 points are used at this machine . Total power used for two machines of equal horse-power ₹320 ; Indirect labour for the machine ₹50 and repairs and renewals ₹40. You are required to find out the machine hour rate for one month when it is expected to work for 40 hours a week Related: Machine Hour Rate - Overheads, Cost Accounting? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In a garima factory the machine of a department costs ₹11500 . It is expected that it will work for 20000 hours and its scrap value is estimated at ₹1500. The rent of factory department is ₹400 per month and 25%of the area of department is utilised for conducting the operation of the machine. One foreman and an attendant are employed on a salary of ₹200and ₹100 per month . respectively , to work on one more machine of a similar type . The expenses of the month incurred in the department are as follows :Light charges for the department ₹80; having 16 points in all out of which only 4 points are used at this machine . Total power used for two machines of equal horse-power ₹320 ; Indirect labour for the machine ₹50 and repairs and renewals ₹40. You are required to find out the machine hour rate for one month when it is expected to work for 40 hours a week Related: Machine Hour Rate - Overheads, Cost Accounting?.
Solutions for In a garima factory the machine of a department costs ₹11500 . It is expected that it will work for 20000 hours and its scrap value is estimated at ₹1500. The rent of factory department is ₹400 per month and 25%of the area of department is utilised for conducting the operation of the machine. One foreman and an attendant are employed on a salary of ₹200and ₹100 per month . respectively , to work on one more machine of a similar type . The expenses of the month incurred in the department are as follows :Light charges for the department ₹80; having 16 points in all out of which only 4 points are used at this machine . Total power used for two machines of equal horse-power ₹320 ; Indirect labour for the machine ₹50 and repairs and renewals ₹40. You are required to find out the machine hour rate for one month when it is expected to work for 40 hours a week Related: Machine Hour Rate - Overheads, Cost Accounting? in English & in Hindi are available as part of our courses for B Com. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free.
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