machine hour rate
machine hour ratea COST RATE which is used in ABSORPTION COSTING to charge the OVERHEADS of a department or COST CENTRE in the cost of a product or job. It is usually used for those departments or cost centres which are highly mechanized, and is computed by dividing the budgeted overheads which have been assigned to the department or cost centre by the estimated total number of machine hours for the period, to arrive at the rate per machine hour. The overhead charge for any product or job will depend upon the number of machine hours required for its production. See also ABSORPTION.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson