Machine hour rate calculation

Kindly refer to Cost Accounting Standard : 3 on Overheads and exposure draft on the same.

hiii shilpa....

i think no detail is given in CAS 3. 

Hiii natrajan,

you refer your financial books depreciation. u allocate amount of dep. on the basis of book value of machines.

We are eligible to show two amount of depreciation ( one for accounting and one for costing).

i want one help from both of you :

I require  Excel sheet of how we calculate machine hour rate with full detail.

if you hacing this pls forwarded to me on my personal mail id : ankushm71 @ gmail.com.

Regards,

CMA Ankush MIttal

** We are not eligible to show two amount of depreciation ( one for accounting and one for costing).

Dear Ankush,

In CAS 3 for Overheads (including Depreciation) illustration is provide as guidance.

I am attaching one excel file for machine hr calculation so that you get idea.

Any baby can provide me excel format for calculating machine hour rate.

Thank & Regards

Ramesh

Even I'm bewildered my the same question.

Lets assume a machine is worth 10000000.

For Machine running one shift if I'm gonna charge 10.34% instead of 4.75%. Think of the impact that it would bring in Dep/Hr. In turn the effect on Product Cost.

I dont see any point charging 10.34% It wont give u any benefit even in the long run.

or is there a reason.

Shilpha,

I dont see anything on the above CAS 3 as u said. do u mind quoting it pls?. U r doing a great job in the forum. My greetings for it.

material cost is 6paise per component and each component takes 10 mins to produce. the machine operator is paid 72 paise per hour and the machine hour rate is rs. 1.50.the setting up of the machine to produce the component takes 2 hours 20 mins.what is the total cost of 10 components and cost per component?

Let me know if this suits you... 

Fixed cost of Machine Hour    2 Hours 20 Mts  @ 1.50/HR      =  3.50

Time required to produce 10 components  100MTS                =   2.50

Total Hours of Labour  ( 2hours/20+100MTS ) =4hours          =   2.88

Material cost for component          10 *6PS                             =   0.60

Total Cost                                                                                =   9.48 or 0.95PS per Comp.

Hope this helps you.

Both are different concept here.The allocation of depreciation is for financial accounting & for cost accounting is to arrive at product cost.If an asset is fully depreciated in financial accounts,auditor will have no objection to this how you build template for pricing your customers......as far as costing is concerned rules of valuation will come into play if you are in a regulated industry.The regulator can poke his nose saying your pricing is inflated to end consumers since your product cost reflected collecting the accelerated depreciation in past if it is a regulated industry.

Where your auditor can trouble you is if he says the inventory what you have valued if it includes the portion of depreciation of a asset which was totally written down then you are valuing your inventory in excess.So you may have to make adjustments to your closing stocks to that extent.

Hi,

Please some one can help me with XL calculation of Machine hour rate for Machine shop in foundry industry please.

As i Joined as a trainee its difficult for me to arrive. please kindly mail to my personal id auditvandhana @ gmail.com