(A) Calculate the machine hour rate of a machine with the information given as follows:

NOTES:
(1) Life of the machine is 10 years. Depreciation is provided on a straight-line basis and is treated as a variable cost.
(2) Repairs and maintenance and consumable stores are variable costs.

(3) Power is consumed for production runs only and set-up maintenance. But cost of power is to be borne by the total time excluding the maintenance stoppages.
(4) The supervisor is supervising the work for fi ve identical machines including the one now considered.
(5) The company hires out excess capacity in the machine shop for outside jobs.

(a) Assuming that hire charges are fi xed at variable cost plus 20%, what rate should be quoted by the company?

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Operating date: Total no. of weeks per quarter - 13 Total no. of hours per week -48 Stoppage due to maintenance -8 hours p.m Time taken for set-up Cost details: Cost of machine Repairs & Maintenance Consumable stores Rent, rates and taxes Operators' wages Supervisor's salary Cost of power - 2 hours per week - Rs. 2,00,000 Rs. 24,000 p.a. Rs. 30,000 p.a Rs. 8,000 per quarter Rs. 3,000 p.m - Rs. 5,000 p.m 15 units per hour at Rs. 3 per unit.