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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.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
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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.
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.
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