Numerical & Notes

Overhead rates
session 8-9

Prof. Prince Bhatia

XIMB
Q.7
The machine shop of a manufacturing concern have six identical machines
manned by six operators. Total cost of machines is Rs. 800000. The following
information relates to six monthly period ended 30 September 2023.
I am
assuming
hours is
for one
machine
Q.8 A machine was purchased on 1st January 2023 for Rs 5 lakhs. The total
cost of all machinery inclusive of new machine was Rs. 75 lakhs. The
following particulars are available. Calculate MHR for new machine.
Expected life of the machine 10 years
Scrap value of new machine@ end of 10th year Rs, 50000
Repair and Maintenance for all machines Rs 20000
Expected number of working hours of the 4000 hours.
machine per year
Insurance premium annually for all machines Rs. 45000.

Power consumption per machine per hour @ Rs. 25 units

10 per unit
Area occupied by new machine 100 sq. ft
Area occupied by other machines 1500 sq. ft
Rent per month of the department 800000 per month
Lightening charges (17:3) 12000 per month
Q.9

Additional Information:
1. Power used during the production is 16 units per hours @ Rs 10 per unit. No current is taken during
maintenance or setting up time.
2. The machine require a chemical solution which is replaced at the end of each week at a cost of Rs.
2000 per week.
3. Cost of maintenance is Rs 50,000 per annum.
4. Two attendant control the operation of this machine with five other identical machines. Their combined
weekly wages amount to Rs. 1200 per week.
5. General work overheads allocated to this machine amount to Rs 20,000 per annum.
Q.10

1. Direct labor hour rate

2. Percentage of Direct wages
3. Machine hour rate.