A manufacturing company uses two identical large and four identical small machines. Each large machine occupies one quarter of the workshop and fully employs three workers ; each small machine occupies half the space of a large machine and fully employs two workers. The workers are paid by piece work. Each of the six machines is estimated to work 1,440 hours per year, while the effective working life is taken as 12,000 working hours for each large machine and 9,000 working hours for each small machine. Large machines cost $ 20,000 each, and small machines $ 4,000 each. Scrap values are $ 4,000 and 100 respectively. Repairs, maintenance and oil are estimated to cost for each large machine $ 4,000 and for each small machine $ 1,200 during its effective life. Power consumption costs 5 P. per unit and amounts for a large machine 20 units per hour and for a small machine 2 units per hour. The manager is paid $ 4,800 a year and workshop supervision occupies % of his time, which is divided equally among the six machines. Details of other expenses are : Rent and rates for workshop $ 6,400 a year, Lighting (to be apportioned in the ratio of workers employed) $ 1,820 a year. Taking a period of three months as a basic, calculate Machine Hour Rate for a large machine and a small machine respectively.
A manufacturing company uses two identical large and four identical small machines. Each large machine occupies one quarter of the workshop and fully employs three workers ; each small machine occupies half the space of a large machine and fully employs two workers. The workers are paid by piece work. Each of the six machines is estimated to work 1,440 hours per year, while the effective working life is taken as 12,000 working hours for each large machine and 9,000 working hours for each small machine. Large machines cost $ 20,000 each, and small machines $ 4,000 each. Scrap values are $ 4,000 and 100 respectively. Repairs, maintenance and oil are estimated to cost for each large machine $ 4,000 and for each small machine $ 1,200 during its effective life. Power consumption costs 5 P. per unit and amounts for a large machine 20 units per hour and for a small machine 2 units per hour. The manager is paid $ 4,800 a year and workshop supervision occupies % of his time, which is divided equally among the six machines. Details of other expenses are : Rent and rates for workshop $ 6,400 a year, Lighting (to be apportioned in the ratio of workers employed) $ 1,820 a year. Taking a period of three months as a basic, calculate Machine Hour Rate for a large machine and a small machine respectively.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:A manufacturing company uses two identical large and four identical small machines. Each large
machine occupies one quarter of the workshop and fully employs three workers ; each small machine
occupies half the space of a large machine and fully employs two workers. The workers are paid by
piece work.
Each of the six machines is estimated to work 1,440 hours per year, while the effective working life is
taken as 12,000 working hours for each large machine and 9,000 working hours for each small
machine. Large machines cost $ 20,000 each, and small machines $ 4,000 each. Scrap values are $
4,000 and 100 respectively.
Repairs, maintenance and oil are estimated to cost for each large machine $ 4,000 and for each small
machine $ 1,200 during its effective life.
Power consumption costs 5 P. per unit and amounts for a large machine 20 units per hour and for a
small machine 2 units per hour.
The manager is paid $ 4,800 a year and workshop supervision occupies % of his time, which is divided
equally among the six machines.
Details of other expenses are :
Rent and rates for workshop $ 6,400 a year, Lighting (to be apportioned in the ratio of workers
employed) $ 1,820 a year.
Taking a period of three months as a basic, calculate Machine Hour Rate for a large machine and a
small machine respectively.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education