Definition
A “Machine Hour” is a unit of measurement used in manufacturing and production industries to quantify the amount of work performed by a machine in a given time frame. It helps in assessing the productivity, efficiency, and utilization of machinery, providing a basis for cost allocation, operational planning, and performance evaluation.
Examples
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Cost Allocation: If a milling machine operates for 50 hours in a month and incurs operational costs totaling $1000, the cost per machine hour is $20.
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Efficiency Measurement: If a machine is expected to produce 1000 units in an hour but produces only 800, the efficiency rating is 80%.
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Production Planning: For scheduling purposes, if a factory requires 10,000 units of product X and the machine produces 500 units per hour, it will need 20 machine hours to complete the task.
Frequently Asked Questions
What is the importance of measuring machine hours?
Measuring machine hours is crucial for several reasons, such as cost allocation, budgeting, scheduling maintenance, and improving overall production efficiency. It helps manufacturers manage their resources better and plan production schedules to meet target deadlines.
How is machine hour used in cost accounting?
In cost accounting, machine hours are often used as a basis for applying overhead costs to products. By determining the cost per machine hour, businesses can allocate expenses related to utilities, maintenance, and depreciation more accurately.
Can machine hours vary between machines?
Yes, machine hours can vary depending on the type of machine, its efficiency, and the specific tasks it performs. Different machines within the same facility may have different utilization rates and operational capabilities.
How do machine hours impact maintenance scheduling?
Monitoring machine hours helps determine when maintenance is required, ensuring machines operate efficiently and preventing breakdowns. Scheduled maintenance based on machine hours can extend the lifespan of machinery and reduce downtime.
Is there a standard formula to calculate machine hours?
The basic formula to calculate machine hours is: \[ \text{Machine Hour} = \text{Total Production Time} / \text{Number of Units Produced} \]
Related Terms
- Throughput: The amount of material or items passing through a system or process.
- Cycle Time: The total time from the beginning to the end of a process, which includes both processing time and waiting time.
- Utilization Rate: The ratio of the time that a machine is operating to the total time that it is available for operation.
- Productivity: A measure of the efficiency of production expressed as the ratio of outputs to inputs in the production process.
- Depreciation: The allocation of the cost of a tangible asset over its useful life.
Online References
- Investopedia - Cost Allocation
- AccountingTools - Machine Hour Method
- Manufacturing Management - Machine Hour Utilization
Suggested Books
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“Managerial Accounting” by Ray H. Garrison, Eric Noreen & Peter Brewer
- This comprehensive textbook explores various managerial accounting concepts including cost allocation, with detailed explanations and examples related to machine hour calculations.
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“Cost Accounting: A Managerial Emphasis” by Charles T. Horngren, Srikant M. Datar & Madhav V. Rajan
- A detailed book offering insights into cost accounting practices and the applications of different cost allocation methods, including the use of machine hours.
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“Manufacturing Processes for Engineering Materials” by Serope Kalpakjian & Steven Schmid
- This book provides an in-depth understanding of various manufacturing processes, machinery, and methods used, along with practical examples of machine hour calculations.
Accounting Basics: “Machine Hour” Fundamentals Quiz
Thank you for exploring the concept of machine hours and assessing your understanding through our fundamentals quiz! Keep enhancing your knowledge for greater efficiency in production and performance management.