15,833 16,667 12,500 35,000 Total overheads of machine per month: Rent (17,500/3 months) per month Depreciation (2,00,000/12 months) per month Indirect charges (1,50,000/12 months) per month Total machine-hours in a month: Without the use of computer With the use of computer Machine-hour rate (without use of computer) 735,000/3,500 hours) When computer is used: Machine-hour rate per hour (determined above) Add computer charges per hour(24,20,000/12 months) = 35,000 per month 2,000 hours 1,500 2,000 3,500 10 10 17.50 27.50 A Hours 600 900 600 y52 17,00 48 (b) Determination of Machine-bour Rate (MHR) for Jobs A, B and C Particulars Jobs B Amount Hours Amount Hours Amount MHR, without computer @ 10 per hour 16,000 19.000 MHR with use of computer @ $27.50 per hour 11.000 16,500 1.000 27,500 Total 17,000 1,500 25,500 1,000 27,500 MHR 17 17 27.50 P.10.15 In a machine shop, the machine-hour rate is worked out at the beginning of a year on the basis of a 13-week period which is equal to three calendar months. The following estimates for operating a machine are relevant Total working hours available per week Maintenance time included in the above Setting up time included in the above Cost details: Operator's wages per month +13,000 Supervisor's salary per month 20,000 Written down value of machine (depreciation at 12 per cent) 18,00,000 Repairs and maintenance per annum 1,60,000 Consumable stores per annum 3.00.000 Rent, rates and taxes (for the quarter apportioned) 48,108 Power consumed is 10 units per hour 65 per unit. Power is required for productive hours only. Setting-up time is part of productive time but no power is required for setting-up jobs. The operator and supervisor are permanent. Repairs and maintenance and consumable stores are variable. You are required to: (a) Work out the machine-hour rate (b) Work out the rate for quoting to the outside party for utilising the idle capacity in the machine shop assuming a profit of 20 per cent above variable cost NN