What is machine hour rate in cost accounting and how it is calaculte?
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It is a method of depreciation which calculates the depreciable amount on the basis of hours that the machine worked....This method is used only where the actual running hours of a machine is available or practically possible to derive....It is recommended for the assets like machinery...
The formula to calculate depreciation under This method is -
Depreciable amount for a year =
[ hours worked in a year x (cost of the asset - salvage value)]/ Total estimated working hours
The formula to calculate depreciation under This method is -
Depreciable amount for a year =
[ hours worked in a year x (cost of the asset - salvage value)]/ Total estimated working hours
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