Further, total overheads related to machine should be segregated in two categories, normally: fixed costs (commonly called standing charges), and variable costs (referred to as machine expenses) for cost control purposes, as also for decision-making purposes. Included in machine expenses are depreciation, power, repairs and maintenance; standing charges include rent and rates, general lighting, insurance, and supervisor's salary. Where the work performed by direct labour personnel is identifiable with a particular machine group, their direct wages should be included as part of the machine group cost. Thus production job will be charged with a machine-hour rate which is inclusive of direct wages. Such a rate is known as comprebensive machine-hour rate. Examples 10.6 and 10.7 illustrate the computation of machine-hour rate and comprehensive machine-hour rate respectively. y40 EXAMPLE 10.6 Compute the machine-hour rate from the following data: Cost of machine 230,00,000 Estimated scrap value after the expiry of its useful life (5 years) 5,00,000 Rent and rates for the shop per month 10,000 General lighting for the shop per month 6,000 Insurance premium for the machine per annum 48,000 Repairs and maintenance expenses per annum 50,000 Power consumption - 10 units per hour 6 per unit 60 Estimated working hours per annum 2.200 (including setting-up time of 200 hours: no power is required during setting-up time) Shop supervisor's salary per month 30,000 The machine occupies one-fourth of the total area of the shop. The supervisor is expected to devote one-fifth of his time for supervising the machine. Determine machine-hour rate