COSTING IN IR

SANJAY UPRETIPAM

Introduction

Freight structure committee (55-57) suggested costing studies.Railways is essentially a joint cost industry.Fully distributed cost is calculated for passenger and goods.Sound accounting system is a prerequisiteCosting was last review in 79-80 then RCA was introduced w.e.f. 1.4.79

Special features of Railway Costing

Thousands of selling points Large geographical areawide variety of servicesTransportation – perishable commodity Highly capital intensive Long life of assets

……contd

Charging what the commodity can bear Competition forced a rethink on this aspectsRailways lost high value traffic and only low value was left. Thus rates based on cost was mooted

Methodology

After closure of the financial accounts the capital and revenue accounts are drawn up.The revenue account is split between the 3 gauges. ( statement no.30), generally known as statement XII.Next stage is splitting up of expenses between suburban and no-suburban services.Next the non-suburban is bifurcated into goods and coaching.

…..contd.

25% of the total expenses are allocated as per head of accounts and 75% are allocated by using certain performance factors. This statement is called statement 15

Next the expenses relating to EMU, Coaching and Goods services are detailed by Railway and send to RB, called proforma V. Goods unit cost are compiled by the costing cell of the RB and the book is popularly called “Green Book”

Purpose

Working out station to station rates.Fare and freight rationalization.Shunting engine and train engine hours to be charged from the sidings.Cost of service estimates

Functional group of goods services

Running of line haulMarshalling YardsTerminalsTransshipment pointsRepacking shedsGeneral overage