The following information is made available from the costing records of a factor: (1) The original cost of the machine $1,00,000 Estimated life 10 years Residual value $5,000 Factory operates for 48 hours per week – 52 weeks in a year Allow 15% towards machine maintenance down-time. 5% may be allowed as setting up time. (11) Electricity used by the machine is 10 units per hour at a cost of 50 cents per unit.

The following information is made available from the costing records of a factor: (1) The original cost of the machine $1,00,000 Estimated life 10 years Residual value $5,000 Factory operates for 48 hours per week – 52 weeks in a year Allow 15% towards machine maintenance down-time. 5% may be allowed as setting up time. (11) Electricity used by the machine is 10 units per hour at a cost of 50 cents per unit.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The following information is made available from the costing records of a factor:
(1)
The original cost of the machine
$1,00,000
Estimated life
10 years
Residual value
$5,000
Factory operates for 48 hours per week – 52 weeks in a year
Allow 15% towards machine maintenance down-time.
5% may be allowed as setting up time.
(II)
Electricity used by the machine is 10 units per hour at a cost of 50 cents per unit.
Calculate the comprehensive machine hour rate and provide working note.

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