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Doctors Medicines MCQs Q&A

  1. Direct material cost method
  2. Prime cost method
  3. Labour hour method
  4. Machine hour method
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1 Answers

Answer: Option 4

In a machine dominated industry Machine hour method of overhead absorption is suitable. Under this method, hourly rate of depreciation is calculated. The cost of the asset (less residual value if any) is divided by the estimated working hours. The actual depreciate for any given period depends upon the working hours during that year.

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