Anudeep.B (Accountant) (29 Points)
03 April 2014What is the maximum number of productive machine hours per machine in one year?
Actually in a year other than leap year we have 365days*24hours=8760hours and in a leap year we have 366days*24 hours=8784hours. But in problems in Overheads chapter they are giving 10,000 Machine hours per machine per annum. How it is possible? Thanks in advance for answering me.
Suman Kumawat
(Article)
(612 Points)
Replied 03 April 2014
please post the whole question in which you have doubt. simply on the basis of single statement we cant help out
Anudeep.B
(Accountant)
(29 Points)
Replied 03 April 2014
Sir, In Overheads chapter in Cost Accounts subject, there is a topic called overhead recovery or overhead absorption rates/methods. In that one of the absorption method is based on Machine Hour Rate.
In that they had given, overhead rate per machine hour = Total overheads to be absorbed ÷ Total no. of machine hours.
In the problems they are giving that machine hours per machine per annum as 10,000 machine hours. Overheads to be absorbed as Rs.1,00,000/-. Overhead absorption rate based on machine hour method is Rs.10/- per machine hour.
My doubt is in an year there are 365 days and in a day there are 24 hours, so in total there can be 8760 hours in an year and 8784 hours in a leap year. But how can they give us 10,000 machine hours.
CAclubindia
