Page 195 - DCOM202_COST_ACCOUNTING_I

Unit 9: Absorption of Overheads

(d) Machine No. 5 occupies one-fifth of the floor space of the department, the rent, rates, Notes
lighting, etc. of which amount to ` 350 per annum.
(e) Charges for Electric power supplied to Machine No. 5, ` 200 per annum.
(f) Charges for oil, waste, etc. supplied to Machine No. 5, ` 30 per annum.
(g) Repairs and Maintenance throughout working life of machine estimated at ` 360.
(h) Cost of supervision and other expenses applicable to Machine No. 5 estimated at
` 150 per annum.
(i) Labour cost of operating the machine is to be ignored in making your calculations.
3. From the following information’s, compute the Machine-hour Rate:

Cost of Machine ` 60,000
Expected Scrap Value ` 10,000
Working Life 10,000 hours
Working Hours in the month of March, 2007 200 hours
Repairs for the Whole Life of Machines ` 12,500

Standing Charges on Machines for the month of March, 2007 ` 500
power used by Machine: 10 units p.h. @ 20 paise p.h.
4. The following information relates to the activities of a production department of factory for
a certain period:

`
Materials used 36,000
Direct wages 30,000
Labour hours worked 24,000

Hours of machine operation 20,000
Overhead chargeable to the dept. 25,000
On one order carried out in the department during the period the relevant data was:
Material used ` 2,000 Labour hours 1,650
Direct wages ` 1,650 Machine hours 1,200

Calculate by three different methods the overhead chargeable to the job.
5. What is the process of ascertaining machine hour rate? What factors do you keep in view
while ascertaining the rate?
6. From the following particulars, compute Machine-hour Rate:

Cost of Machine ` 90,000
Establishment Charges, etc. ` 10,000
Life of the Machine 10 years
Working Hours per year 2,000 hours

Repairs: 50% of depreciation
Consumption of Electric power 10 unit p.h. @ 25 paise per unit

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