Page 186 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes Overhead charges @ 66.67% chargeable to the job for which materials used accounted for
` 6,000.
66 67
.
= 6,000 × = 4,000
100
(b) Labour Hour Rate:
Overhead exp enses
=
Direct labour hours
36 000
,
= = ` 1
,
36 000
Overhead for the job @ ` 1 for 3,200 hours
= ` 3,200

(c) Machine Hour Rate:
Overhead exp enses
=

Machinehours
36 000
,
= = ` 120
.
,
30 000
Overhead for the job @ ` 1.20 for 2,400 hours
= ` 2,880

Example: The following annual expenses are incurred in respect of a machine where
annual labour is almost zero and where the work is done by means of five machines of exactly
similar type and specifications.

`
Rent and rates (Proportioned to the floor space occupied for the shop) 4,830
Depreciation on each machine 500
Repairs and maintenance for five machines 1,000
power (as per metre) @ ` 1 per 16 units consumed for the shop 3,750
Electric charges for light in the shop 540
Attendant: There are two attendants for the five machines and they are each
paid ` 60 per month
Supervision: There is one supervisor for the five machines whose salary are
` 250 per month
Sundry supplies, such as lubricants, jute and cotton waste, etc., for the shop 494
Hire-purchase installment payable for the machines (including ` 300 as
interest)
The machine uses 10 units of power per hour 1,200

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