Machine HOUR RATE PDF

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Machine hour explanation...

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MACHINE HOUR RATE FORMAT OF COMPUTATION OF MACHINE HOUR RATE Particulars Per Annum or Per Per hour Month I.STANDING CHARGES (Or) FIXED CHARGES Rent Lighting and heating Foreman’s salary Insurance Wages of attendants Supervision Miscellaneous overheads General overheads Consumable stores etc TOTAL STANDING CHARGES STANDING CHARGE RATE= Total standing charges

[A]

Machine hours II.

RUNNING

CHARGES (or)

CHARGES

(or)

VARIABLE

MACHINE EXPENSES

Repairs and maintenance Depreciation Chemicals Power etc. VARIABLE CHARGE RATE = Total Running charges

[B]

Machine hours

MACHINE HOUR RATE

=

A+B

Note:  Separate the machine expenses into standing and running charges.  If purchase price or original cost of the machine, installation charges, scrap (residual) value and estimated life of the machine is given, calculate depreciation.  ie, depreciation = original cost+ installation charges- scrap(residual) value Estimated life of the asset  If supervisor/foreman’s time devoted for the machine is given, salary /wages is calculated on the basis of time devoted.  If area occupied by the machine is given, rent and lighting are calculated on the basis of area occupied.  Setting up time non productive is deducted while calculating Machine Hours/ Effective machine hours.

Q7. From the following particulars compute machine hour rate: Cost of machine 1, 14,800 Installation charges 5400 Anticipated life of machine 10 years Residual value at the end of 10 years 5000 Rent and rates per annum 12000 Insurance of the machine p.a 3000 Repairs and maintenance p.a 8640 Consumable stores p.a 1200 Production services p.a 1080 Power cost is 5 units per working hour @ 40 paisa per unit Setting up time (non productive) 400 hours There are 300 working days of eight hours in a year Solution:

Q8. The following particulars relate to a new machine purchased:

Purchase price of Machine Rs.4, 00,000 Installation expenses Rs.1,00,000 Rent per quarter Rs.15,000 General lighting for the total area Rs.1,000 p.m Foreman’s salary Rs.30,000 p.a Insurance premium for the machine Rs.3,000 p.a Estimated repairs for the machine Rs.5,000 p.a Estimated consumable stores Rs.4,000 p.a Power 2 units per hour at Rs.50 per 100 units Estimated life of the machine is 10 years The estimated value at the end is Rs.1, 00,000. The machine is expected to run 20,000 hours in its life time. The machine occupies 25% of the total area. The foreman devotes 1/6 of his time for the machine. Calculate the machine hour rate for the machine. Solution:

9) Calculate the Machine Hour Rate from the following: (End Term 2018, 7.5 marks)

Cost of Machine Rs.1, 30,000 Installation Charges Rs. 20,000 Working Life 10 years Working Hours 1,500 per year Repairing charges 40% of Depreciation Power 10 units per hour @ Rs. 0.10 per unit Lubricating oil Rs. 6 per day of 8 hours Consumable stores Rs. 10 per day of 8 hours Wages of operator Rs. 4 per day Machine Insurance 40% of depreciation Solution: Computation of Machine Hour Rate Particulars

Per Per hour Annum

I. STANDING CHARGES Insurance 40% of Depreciation=6,000 [ per hour=6,000 1500 hours

]

6000

Wages of operator Rs. 4 per day=4 8 STANDING CHARGE RATE= [A] II.

4 0.5

4.5

RUNNING CHARGES

Depreciation=1,30,000+20,000 = 15,000[ per hour= 15000 10 1500 hours Consumable Stores=10 8 Power=10*0.10=1 6 8 Repairing Charges[ per hour=6,000 1500 hours

] 15,000

1.25 1

Lubricating oil

0.75 ] 6,000

4 17

VARIABLE CHARGE RATE [B] MACHINE HOUR RATE

10

=

A+B=4.5+17

21.5 Ans...