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Machine hour rate is a method of absorbing factory overheads to production on the basis of machine hours consumed by a job or product. It is particularly suitable in industries where production is carried out mainly by machines and where machine time forms a significant portion of the total production cost. Under this method, overhead expenses are allocated and apportioned to different machines, and the cost per machine hour is computed. The formula for machine hour rate is: Machine Hour Rate = Total Machine Overheads / Total Effective Machine Hours Overheads included in machine hour rate are classified into standing charges and machine expenses. Standing charges include rent and rates of factory building, lighting, insurance, _________ _______ ______ ________ _____ _________ _____ ____ ____.
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