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problem: The given particulars relate to the electrical appliances machine:

a) The original cost of the machine employed (purchased in June 1982) was Rs. 10,000. Its estimated life is 10 years; the estimated scrap value at the end of its life is Rs. 1000 and the estimated working time per year (50 weeks of 44 hrs) is 2,200 hrs of which machine maintenances and so on is estimated to take up 200 hrs.

No other loss of working time is predicted, setting up time estimated at 5% of total productive time is regarded as the unproductive time. (Bank holidays are to be avoided).

b) Electricity employed by the machine throughout production is 10 units per hour at a cost of 10 P. per unit. No current is taken throughout maintenance or setting up.

c) The machine needs chemical solution that is replaced at the end of each week at a cost of Rs. 20 each time.

d) The estimated cost of maintenance per year is Rs. 1,200

e) Two attendants control the operation of the machine altogether with five other identical machines. Their combined weekly wages, insurance and the employer’s contributions to holiday pay amount to Rs. 120.

f) Departmental and general works overheads allocated to this machine for the year 1982-83 amount to Rs. 2,000.

You are needed to compute the machine hour rate essential to provide for recoupment of the cost of operating the machine.

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M98469

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