Question

Under _____ method depreciation is calculated on the basis of hours worked during the year by the machine.

• A. Inventory system of depreciation
• B. Machine hour rate method
• C. Sum of years digit method
• D. Depletion Method

Answer 1

The correct option is B Machine hour rate method

The machine hour rate method is similar to the labor hour rate method and is used where the work is performed primarily on machines. Formula used =

Factory overheads/machine hours.
Under this method, hourly rate of depreciation is calculated. The actual depreciation for any given period depends upon the working hours during that year.