Calculate machine-hour rate of machine A: | Particulars | Rs. | | --- | --- | | Consumable stores for machine A | 600 | | Consumable stores for machine B | 1,000 | | Repairs for Machine A | 800 | | Repairs for Machine B | 1,200 | | Heat and Light | 360 | | Rent | 1,200 | | Insurance of Building | 4,800 | | Insurance of Machines | 800 | | Depreciation of Machines | 700 | | Room Service | 60 | | General charges | 90 | Additional Information: | Machine | Working Hours | Area (sq.ft) | Book value | | --- | --- | --- | --- | | A | 10,000 | 100 | 12,000 | | B | 25,000 | 500 | 20,000 |

> > [!TLDR] > Charging direct items to A and apportioning common costs (area, book value, working hours) gives total overhead for A ≈ Rs. 3,058.21; ÷ 10,000 hours = **≈ Rs. 0.31 per machine hour**. > > **Bases of apportionment used** (stated where the question does not specify): > - Floor area (A:B = 100:500 = 1:5) → Heat & Light, Rent, Insurance of building, Room service. > - Book value of machines (A:B = 12,000:20,000 = 3:5, total 32,000) → Insurance of machines, Depreciation of machines. > - Working (machine) hours (A:B = 10,000:25,000 = 2:5, total 35,000) → General charges (no specific basis given; assumption stated). > - Consumable stores and repairs are given machine-wise, so charged **directly**. > > **Computation of overhead for Machine A** > > | Item | Basis | Working | Rs. (for A) | > | --- | --- | --- | --- | > | Consumable stores (A) | Direct | — | 600.00 | > | Repairs (A) | Direct | — | 800.00 | > | Heat and Light | Area 100/600 | 360 × 100/600 | 60.00 | > | Rent | Area 100/600 | 1,200 × 100/600 | 200.00 | > | Insurance of building | Area 100/600 | 4,800 × 100/600 | 800.00 | > | Insurance of machines | Book value 12,000/32,000 | 800 × 12,000/32,000 | 300.00 | > | Depreciation of machines | Book value 12,000/32,000 | 700 × 12,000/32,000 | 262.50 | > | Room service | Area 100/600 | 60 × 100/600 | 10.00 | > | General charges | Working hours 10,000/35,000 | 90 × 10,000/35,000 | 25.71 | …

Calculate machine-hour rate of machine A: | Partic – Class 12 Cost Accounting

Question 26 of 67

Calculate machine-hour rate of machine A:

Particulars	Rs.
Consumable stores for machine A	600
Consumable stores for machine B	1,000
Repairs for Machine A	800
Repairs for Machine B	1,200
Heat and Light	360
Rent	1,200
Insurance of Building	4,800
Insurance of Machines	800
Depreciation of Machines	700
Room Service	60
General charges	90

Additional Information:

Machine	Working Hours	Area (sq.ft)	Book value
A	10,000	100	12,000
B	25,000	500	20,000

ChseodishaCHSE Odisha Plus Two (Class 12) Commerce Board 2019Subjective· 8mImportance★★★★★est

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Charging direct items to A and apportioning common costs (area, book value, working hours) gives total overhead for A ≈ Rs. 3,058.21; ÷ 10,000 hours = ≈ Rs. 0.31 per machine hour.

Bases of apportionment used (stated where the question does not specify):

Floor area (A:B = 100:500 = 1:5) → Heat & Light, Rent, Insurance of building, Room service.
Book value of machines (A:B = 12,000:20,000 = 3:5, total 32,000) → Insurance of machines, Depreciation of machines.
Working (machine) hours (A:B = 10,000:25,000 = 2:5, total 35,000) → General charges (no specific basis given; assumption stated).
Consumable stores and repairs are given machine-wise, so charged directly.

Computation of overhead for Machine A

Item	Basis	Working	Rs. (for A)
Consumable stores (A)	Direct	—	600.00
Repairs (A)	Direct	—	800.00
Heat and Light	Area 100/600	360 × 100/600	60.00
Rent	Area 100/600	1,200 × 100/600	200.00
Insurance of building	Area 100/600	4,800 × 100/600	800.00
Insurance of machines	Book value 12,000/32,000	800 × 12,000/32,000	300.00
Depreciation of machines	Book value 12,000/32,000	700 × 12,000/32,000	262.50
Room service	Area 100/600	60 × 100/600	10.00
General charges	Working hours 10,000/35,000	90 × 10,000/35,000	25.71

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

CBSE 2023Set ANNUAL1 markMCQ
$Q. Machine hour rate is a method which is used for :$
(a) Allocation overhead
(b) Apportionment of overhead
(c) Reapportionment of overhead
(d) Absorption of overhead
›Reveal solutionSolution

Machine hour rate is a method of absorption of overhead.

Overhead accounting moves through stages: collection → allocation → apportionment → re-apportionment → absorption. Absorption means charging the overhead of a cost centre to the cost units passing through it.

…

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CBSE 2020Set ANNUAL1 markMCQ

Q. One of the following which is not a standing change is

(a) power

(b) insurance

(d) rates

›Reveal solution

Power is a running charge, not a standing charge — option (a).

In computing a machine hour rate, expenses are split into:

Category	Nature	Examples
Standing (fixed) charges	Incurred whether or not the machine runs	Rent, rates, insurance, supervision
Running (variable) charges	Incurred only while the machine operates	Power, fuel, depreciation (usage-based), repairs
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CBSE 2020Set ANNUAL1 mark
$Q. Fill in the blank: When majority of production is done by machines the preferred method of absorption is ________.$
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The answer is the machine hour rate.

When production is largely machine-based, machine time is the main cost driver of factory overheads (power, depreciation, repairs). Absorbing overhead on the machine hour rate - overhead cost per machine hour x machine hours used by the job - gives the most accurate charge in such a department, whereas a labour …

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