A machine-hour is a measurement used to apply factory overhead to manufactured goods. ... When there are few machines in production, it is more common for labor hours to be the basis upon which factory overhead is allocated to produced goods.

Why is machine hour rate used?

Machine hour rate is the cost of running a machine per hour. It is one of the methods of absorbing factory expenses to production. It is used in those industries or departments where machinery is predominant and there is little or practically no manual labour.

What do you mean by machine hour?

: the operation of one machine for one hour used as a basis for cost finding and for determining operating effectiveness.