## Machine Hour Rate — Advantages and Disadvantages
The machine hour rate absorbs overheads on the basis of hours a machine runs. It is ideal in machine-intensive environments.
| Advantages | Disadvantages |
|---|---|
| Ideal when machines are the main factor of production. | Additional data on machine operating time must be recorded and maintained. |
| Under-absorption of machine overheads reveals the extent to which machines were idle. | Computing a separate machine hour rate for each machine/group adds extra work. |
| Particularly useful when one operator handles several machines, or several operators work on one machine (e.g., automatic screw manufacturing, belt press for conveyor belts). |
> Insight: The diagnostic value of under-absorption (showing machine idleness) is a major reason to prefer the machine hour rate in automated plants — but it demands disciplined time records.