The overhead expenses of a factory are allowed on the machine hour method. You are required to calculate the hourly rate for a certain machine from the following information: Cost 58,000 3,000 Estimated scrap value Estimated working life 20,000 hours 12,000 Estimated cost of maintenance during working life of machine Power used for machine 1 per hour 1,500 Rent, rates etc. per month (10% to be charged for this machine) Normal machine running hours during a month 180 hours Standing charges other than rent, rates etc. per month 200 [Ans: 6.30]
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
![The overhead expenses of a factory are allowed on the machine hour method. You are required
to calculate the hourly rate for a certain machine from the following information:
Cost
58,000
3,000
Estimated scrap value
Estimated working life
20,000 hours
₹12,000
Estimated cost of maintenance during working life of machine
Power used for machine.
1 per hour
Rent, rates etc. per month (10% to be charged for this machine)
1,500
Normal machine running hours during a month
180 hours
Standing charges other than rent, rates etc. per month
200
[Ans: 6.30]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4cbfac56-f9b7-4e96-9468-3439f4e421bb%2Fa6037ee3-8a2a-401e-90b9-df7c8eb0b251%2F42vlum_processed.jpeg&w=3840&q=75)
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