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Page 1 Machine Hour Rate Page 2 Machine Hour Rate Meaning • “The Machine Hour Rate is an actual or predetermined rate of cost apportionment for overhead absorption” Page 3 Machine Hour Rate Meaning • “The Machine Hour Rate is an actual or predetermined rate of cost apportionment for overhead absorption” Calculation • “Machine hour Rate is calculated by dividing the cost to be apportioned or absorbed by the number of hours for which a machine or machines are operated or expected to be operated” • Machine Hour Rate = Total Factory Overheads Total Machine Hours Page 4 Machine Hour Rate Meaning • “The Machine Hour Rate is an actual or predetermined rate of cost apportionment for overhead absorption” Calculation • “Machine hour Rate is calculated by dividing the cost to be apportioned or absorbed by the number of hours for which a machine or machines are operated or expected to be operated” • Machine Hour Rate = Total Factory Overheads Total Machine Hours Basis of Apportionment • Rent, Rates, Taxes, etc. • Depreciation • Lighting • Heating • Power • Repairs and Maintenance • Supervisory Expenses • Labour Welfare Expenses • Insurance • Lubricating Oil, Cotton Waste and Consumable Stores • Interest included in Hire-Purchase. Page 5 Machine Hour Rate Meaning • “The Machine Hour Rate is an actual or predetermined rate of cost apportionment for overhead absorption” Calculation • “Machine hour Rate is calculated by dividing the cost to be apportioned or absorbed by the number of hours for which a machine or machines are operated or expected to be operated” • Machine Hour Rate = Total Factory Overheads Total Machine Hours Basis of Apportionment • Rent, Rates, Taxes, etc. • Depreciation • Lighting • Heating • Power • Repairs and Maintenance • Supervisory Expenses • Labour Welfare Expenses • Insurance • Lubricating Oil, Cotton Waste and Consumable Stores • Interest included in Hire-Purchase. Presentation/Computation • Standing Charges • Machine ChargesRead More
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FAQs on PPT - Machine Hour Rate - Cost Accounting - B Com
| 1. What is machine hour rate? |  |
Ans. Machine hour rate is a method used to determine the cost of operating and maintaining a machine per hour. It is calculated by dividing the total cost of running the machine, including depreciation, maintenance, and other expenses, by the number of machine hours it is expected to operate.
| 2. How is machine hour rate calculated? | |
Ans. Machine hour rate is calculated by dividing the total cost of running and maintaining a machine by the number of hours the machine is expected to operate. The formula for calculating machine hour rate is:
Machine Hour Rate = Total Cost of Machine / Expected Machine Hours
This calculation considers all the costs associated with the machine, such as depreciation, maintenance, repairs, and overhead expenses.
| 3. What are the advantages of using machine hour rate? | |
Ans. There are several advantages of using machine hour rate in cost calculations. Firstly, it provides a more accurate and fair allocation of costs to products or services that use the machine. It also helps in determining the profitability of different products or services by considering the machine utilization. Additionally, it helps in identifying areas where machine efficiency can be improved, leading to cost savings.
| 4. How can machine hour rate be used for cost control? | |
Ans. Machine hour rate can be used for cost control by monitoring the actual machine hours used and comparing it with the expected machine hours. If the actual machine hours are higher than expected, it indicates a potential inefficiency or excessive usage, which can be addressed to reduce costs. By regularly analyzing the machine hour rate, businesses can identify cost-saving opportunities, such as optimizing machine utilization or reducing maintenance expenses.
| 5. What factors should be considered when calculating machine hour rate? | |
Ans. Several factors should be considered when calculating machine hour rate. These factors include the initial cost of the machine, its expected useful life, the estimated number of hours it will be used, the cost of maintenance and repairs, depreciation, and any other overhead expenses associated with operating the machine. Additionally, factors like machine efficiency, downtime, and idle time should also be considered to accurately determine the machine hour rate.
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Nov 15, 2024 Last updated |
Document Description: PPT - Machine Hour Rate for B Com 2024 is part of Cost Accounting preparation.
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