Cost Accounting Machine Hour Rate Numerical Question Notes
Cost Accounting Machine Hour Rate Numerical Question Notes :- In This post we are updated to most important numerical question of cost accounting chapters name is Machine hour Rate and here you can find theory notes of cost accounting important theory and important question and other chapters links.
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can you please tell the solution to this question
Calculate the machine hour rate of a Machine from the following information:
1. Cost of the Machine = Rs. 1,25,000 Scrap value = Rs. 5, 000
2. Working Life of the machine is 10 years with 20000 working hours per year
3. Estimated Repair charges during the working life of Machine = Rs. 20,000
4. Consumption of electric power 10 units per hour @Rs 1.40 per unit.
5. Cost of Lubricating oil Rs.20 per day of 8 hours.
6. Consumable stores Rs. 100 per day of 8 hours.
7. Insurance Charges = 5% of Cost of Machine.
Standing charge:
lubricating oil. 20
Consumable Store. 100
Standing charges per hour. 15
120 divided by 8= 15
Variable charges:
Depreciation: 125000-5000/10 multiply by working hours20000=•6
Repair: 20000/20000=1
Power: 10 x 1•40=14
15•6
MHR= 30.6
To calculate the machine hour rate, we need to consider the various costs associated with the machine and divide it by the total number of working hours over its lifespan. Let’s calculate step by step:
Step 1: Calculate the total cost of the machine
Total Cost = Cost of the Machine – Scrap Value + Estimated Repair Charges + Insurance Charges
Total Cost = Rs. 1,25,000 – Rs. 5,000 + Rs. 20,000 + 0.05 * Rs. 1,25,000
Total Cost = Rs. 1,25,000 – Rs. 5,000 + Rs. 20,000 + Rs. 6,250
Total Cost = Rs. 1,46,250
Step 2: Calculate the total working hours over the machine’s lifespan
Total Working Hours = Working Life of the machine * Working Hours per year
Total Working Hours = 10 years * 20,000 hours/year
Total Working Hours = 2,00,000 hours
Step 3: Calculate the total cost per hour
Total Cost per Hour = Total Cost / Total Working Hours
Total Cost per Hour = Rs. 1,46,250 / 2,00,000
Total Cost per Hour = Rs. 0.73125 per hour
Step 4: Calculate the additional costs per hour
– Consumption of electric power: 10 units per hour * Rs. 1.40 per unit = Rs. 14 per hour
– Cost of Lubricating oil: Rs. 20 per day of 8 hours = Rs. 20 / 8 = Rs. 2.50 per hour
– Consumable stores: Rs. 100 per day of 8 hours = Rs. 100 / 8 = Rs. 12.50 per hour
Step 5: Calculate the final machine hour rate
Machine Hour Rate = Total Cost per Hour + Additional Costs per Hour
Machine Hour Rate = Rs. 0.73125 + Rs. 14 + Rs. 2.50 + Rs. 12.50
Machine Hour Rate = Rs. 29.73125 per hour
Therefore, the machine hour rate of the machine is approximately Rs. 29.73 per hour.