Question

Calculate machine hour rate from the following :
Running hours p.a. 2,000 hours
Repairs p.a. Rs.160
Rent p.a. Rs.320
Cost of machinery Rs.4,000
Depreciation 7.5% p.a.

Answer 1

Explanation:

Machine hour rate is obtained by dividing the total running expenses of a machine during a particular period by the number of hours the machine is estimated to work during that period.

Answer 2

The machine hour rate is Rs 2.24.

Given:

Running hours pa = 2000 hours

Repairs pa = Rs 160

Rent pa = Rs 320

Cost of machinery = Rs 4000

Depreciation pa = 7.5%

To find: Machine hour rate

Solution:

We know that,

Machine hour rate = Machine cost p.a./ Running hour p.a.

⇒ Machine cost = Cost of machinery + Rent + Repairs + Depreciation

⇒ Machine cost = 4000 + 320 + 160 + (7.5% of 4000)

⇒ Machine cost = 4480 + (7.5 x 40)

⇒ Machine cost = 4480 + 30 = 4480

Hence,

Machine hour rate = 4480/2000 = Rs 2.24

∴ The machine hour rate is Rs 2.24.

SPJ2