Explain the computation of machine hour rate with the help of an example.

The computation of machine hour rate is essential in cost accounting to determine the cost incurred for using a machine per hour. This rate helps in allocating the cost of machine usage to products, jobs, or processes based on the time the machine is utilized. The machine hour rate is primarily calculated by considering both the fixed and variable costs associated with the machine’s operation.

Steps for Calculating Machine Hour Rate:

1. Identify the Total Fixed Costs: Fixed costs are those that do not change with the number of hours a machine operates. These costs are incurred irrespective of machine usage. Fixed costs __________ ___ _________ _________ ___.
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