Machine hour rate calculation

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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 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.




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 @



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