What are the advantages of machine hour rate?

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The Advantages of Machine Hour Rate in Cost Accounting.

  • It helps to compare the effective deficiencies and cost off operating different machines.

    Variable Manufacturing Overhead Variance Analysis

    image source: 2012books.lardbucket.org/books/accounting-for-managers/section_14/c25d6da50580563447ff2c5919b894f0.jpg

  • It brings light to the existence of idle time of machine.
  • It is most scientific practical and accurate method of recovery of manufacturing overheads.
  • It provides useful data for estimating cost of production setting of standards and for fixing selling prices for quotations.
  • It enables management to decide how far the machine work is preferable over manual work.
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