Questions 12

A production department of a manufacturing company has three different machines, for each of which it is desired to establish machine hour rates. The overhead expenses for this Department for the year ending 31st December, 1978 are : Consumable Stores : Rs. Rs. Machine No. 1 300 Machine No. 2 500 Machine No. 3 600 1,400 Repairs and Maintenance : Machine No. 1 400 Machine No. 2 600 Machine No. 3 800 1,800 1. Some accountants take depreciation as a standing charge. Rs. 720 Power Heat and Light Rent and Rates Insurance of Buildings Insurance of Machines Depreciation of Machines Supervision General Charges 400 2,400 200 480 7,200 4,400 1,100 20,100 Additional operating information is available as follows : Effective H.P. Area Occupied Book Value of Working (sq. ft.) Machines Hours Machine No. 1 5 100 12,000 10,000 Machine No. 2 10 500 20,000 25,000 Machine No. 3 15 400 16,000 20,000 You are required to calculate a Machine Hour Rate for each of the three machines. Show clearly the basis of apportionment that you use