Machine Hour Rate Quiz

What is the basis of apportionment of overheads to machines?

• Insured value of machine

• Ratio of floor area occupied by each machine

• Time devoted by the supervisors to each machine

• Number of light points of machine

What are the advantages of Machine Hour Rate?

• Does not consider actual running time of the machine

• Accurate method of absorption of overheads

• Gives inaccurate results

• Does not facilitate cost analysis for cost control

What is the limitation of Machine Hour Rate method?

• Applicable only where cost centres mostly do production work on machines

• Does not involve additional staff for clerical work

• Easy to estimate machine hours well in advance of production

• Does not lead to misleading results

How is the machine hour rate calculated?

• Total overheads divided by effective working hours of the machine

• Total overheads minus idle time of the machine

• Total overheads multiplied by total running hours of the machine

• Total overheads divided by total running hours of the machine

What is the comprehensive machine hour rate?

• Overhead only absorbed by the cost units

• Direct wages only absorbed by the cost units

• Overhead and direct wages absorbed by the cost units in separate rates

• Overhead and direct wages absorbed by the cost units in one single rate

Which expense is NOT considered while calculating the machine hour rate?

• Repairs and maintenance

• Power charges

• Rent and rates

• Direct wages

What is the basis for apportioning the supervisor's salary to machines?

• Insured value of machine

• Number of light points of machine

• Time devoted by the supervisors to each machine

• Ratio of floor area occupied by each machine

How are the standing charges allocated to machines?

• Equally based on the space occupied by each machine

• Based on the number of attendants for each machine

• Based on the direct wages of the machine operator

• Based on the power consumption of each machine

What is the hourly rate for variable charges if the depreciation is Rs. 2000 and the working hours are 1,200?

• Rs. 20.00

• Rs. 1.67

• Rs. 5.00

• Rs. 0.46

How is the total machine hour rate calculated?

• Simple machine hour rate + Direct wages per hour

• Comprehensive machine hour rate - Direct wages per hour

• Simple machine hour rate - Direct wages per hour

• Comprehensive machine hour rate + Direct wages per hour