Ans.

Working Notes:
(i) Total Productive hours = Estimated Working hours – Machine Maintenance hours
= 2,200 hours – 200 hours = 2,000 hours
Rs.10,000 - Rs. 1,000
(ii) Depreciation per annum = = Rs.900
10years
(iii) Chemical solution cost per annum = Rs. 20 × 50 weeks = Rs.1,000
Rs. 120 × 50 weeks
(iv) Wages of attendants (per annum) = = Rs.1, 000
6 machines
Calculation of Machine hour rate
Particulars Amount Amount
(per annum) (per hour)
A. Standing Charge
(i) Wages of attendants 1,000
(ii) Departmental and general works overheads 2,000
Total Standing Charge 3,000

 3, 000 
Standing Charges per hour   1.5
 2, 000 
B. Machine Expense
(iii) Depreciation 900 0.45
(iv) Electricity - 1.37

 RS.0.09 × 16 units × 1, 900 hours 

 
 2, 000 hours 
(v) Chemical solution 1,000 0.50
(vi) Maintenance cost 1,200 0.60
Machine operating cost per hour (A + B) 4.42

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Navkar Institute | CA intermediate | Paper 2 : Cost and Management Accounting - 77 -