Works overhead is Rs 40,000, total machine hours is 8500 hours and time allowed for machine setting is 500 houRs What is the machine rate?
A. Rs. 2 per hour
B. Rs. 3 per hour
C. Rs. 4 per hour
D. Rs. 5 per hour
Answer: Option D
Solution (By Examveda Team)
Machine hour rate = Works overhead / Machine hour= 40000 / (8500 - 500) = Rs. 5 per hour.
machine hour rate= overhead cost/Actual machine hours
=40000/8500-500= Rs.5p hr