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What is the maximum number of productive machine hours per m

Anudeep.B (Accountant) (29 Points)

03 April 2014

What 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.

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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

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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.