How does the MPAA decide what rating to give a movie?

I know it's a different system, but there was a fascinating interview with the head of the BBFC (the British equivalent of the MPAA) on BBC radio last week. The complete programme is available to download as a podcast (look for the "Daniel Craig, 16 Dec 11" episode).

He explains that they have certain rules of thumb (e.g. no more than 4 uses of the F-word in a 12A - roughly equivalent to PG-13), but that these are only guidelines and can be broken (most recently in the case of The King's Speech which was rated 12A despite lots of uses of the F-word in the speech therapy scenes). He also explains why the BBFC initially rejected Human Centipede 2, saying the were unable to pass it even with cuts, but subsequently reconsidered it after the distributor made cuts and resubmitted the film.

So generally (in Britain at least) it comes down to a mixture of fairly strong (but not rigid) guidelines and subjective judgment.