WORKSHOP ACCOUNTS - Revised Costing Systems (RCS) FOR A/C LOCOS (RITES)

Revised Costing Systems (RCS) in brief:-

Introduction

During the year 1994, Railway Board circulated a Cost Manual for Electric Locomotives & Diesel Locomotive POH repairs in Workshops.  Loco Works/Perambur which is attending Electric Locomotive POH repairs, implemented the new systems way back in 1996. Similar scheme for Coaches at present under trial run at Matunga Workshop and for Wagons may take some more time.

Recently, Railway Board through EDF(Comml.) asked all Railways to give full cognizance to financial results of  Revised Costing System and adopt the same for all accounting purposes. Further, advised to send the details of difficulties faced, if any, to Board and also directed to furnish type wise Loco POH unit cost. Since the RCS has not fully integrated with that of financial accounts and the results generated out RCS too not fool proof due to input error in regard to utilization of Men, Material and details of outturn. Indeed, the system has been designed with the following object:

Methodology

To compile the normal POH (must change and repair schedule items) unit cost under Group-A, for inter and intra shop or inter Railway comparison. Repair and replacement of major assemblies cost has been collected under Group-B. These items will not be attended during the normal POH, unless situation required based on the condition of the assembly. Capital spares expenditure is being collected under Group-C.

The cost of Group-A is collected under 500 serial cost centre for the entire outturn and average cost per equated unit is arrived and Loco wise cost is calculated based on its Pre-determined Ratio. Here, WAM type Loco is taken as one unit and other types have been equated to this standard unit to arrive its POH unit cost. Again in Group-B also same methodology adopted, instead of Loco, the assembly of WAM has been taken as standard unit. The expenditure is collected under 600 serial cost centre. In Group-B assembly cost is calculated and allocated to the individual Locos based on the replacement or extent repair. In case, spares were supplied to sheds/Divisions the unit cost multiplied by number unit is charged against that shed or division. To this effect workorder for each shed/division may be opened under general standing workorder system and the expenditure may be transferred to that workorder duly giving minus debit to relevant Group-B cost centre. Cost of Group-C, for having changed the capital spares has been collected under cost centre 701 and directly allocated to individual Loco. Under this Group there won’t be any Labour booking is allowed.

Existing System of collection of cost data & Allocation.

Sl. No:
01	Presently the labour hours being collected through (i) tally sheet (ii) Job Cards. This hours multiplied by Average hourly rate of that category gives the direct labour Cost. Indirect Labour Cost levied at Predetermined rate based on direct Labour.
02	Stores consumption data collected through statement number 23 from stores EDPM and integrated to WGR. The source for this i.e. statement 23 is issue notes (s 1313)
03	The entire expenditure in the WGR is being summarized under relevant allocation heads for outturn purpose and preparation of JEs/TDs. The system is in built based on the workorders the cost being allocated or collected automatically under Minor heads of the Demand. Direct Labour plus LOC is summarized under PU 34 and Stores plus stores oncost is under PU 35.
04	Since WGR and Outturn being generated demand wise (Allocation head wise). In case of AC Locos the heads operated are: (i). 05-531 POH of AC Locos (ii). 05-550 Special repairs and Overhauls. (iii). 05-560 Other Repairs.

Revised System and Action Required.

Sl No:	Action Required	Accounts	Workshop
01	The System should first be strengthened at Loco Works and at Accounts Office.	Dedicated staff and infrastructure such as separate computer and printer is essential at the Accounts Office	Production PPCO of Loco Works should be geared up to meet the situation & exclusive staff required to co-ordinate between shops & Accounts
02	All the returns should be compiled at shop floor cost centre wise and send to Accounts by 5th of every month (i.e. Stock, Non-Stock, Outturn (Shop & Cost Centre wise)		sssssas    Shop coordinator has to collect all returns and handover to Accounts
03	Tally sheet should reach EDPM in time and WGR data through floppy made available to Costing Cell by…3 rd , to enable to process it.	Time office	Card closing
04	Costing cell should co-ordinate with shop coordinator to collect data by 5th and necessary data entry, listing etc., should be completed by 10th.	Costing
05	Costing cell collect the WGR data and integrate the same to RCS by 13 th.	Costing
06	Costing Cell generates the Output and handed over one copy to PCO/LW by 14th.	Costing
07	PCO verification  and ARD if any , will be given on  14th		PCO
08	Final results generation by 15th.	Costing
09	WC Section will collect the statement of Loco wise & Cost Centre wise cost to enable to prefer debits against Railway/Sheds	WC Section
10	OS/LW Budget, Sr. SO (A) /W / Budget have to adopt the results of the Revised Costing System for their Budget estimation.	W.Budget	OS Budget LW
11	Costing section will communicate the Type wise POH Loco Unit Cost to board duly taking average of particular type of Locos for the specified period.	Costing

Normally asked questions and suggested answers

How Allocation is done under RCS?.	Since there is mention about this we may collect the whole expenditure under Minor head 500 and should be allocated to Sub-head/detailed head based on object/nature of expenditure through JE/F. Rly bills. This may solve the problem.
How to arrive budget estimate?	Estimates may be made based on the previous year Average actual in case of Normal POH and Spare/Assembly average Unit Cost in respect of Group “B” items. In case of Capital Spares, cost of Spares as it is taken for Budget estimate. Summing all the above demand 05-500 will reflects in the Budget.

Incentive/Time Office		Workshop Coordination		Costing
Work in brief	Target Date	Work in brief	Target Date	Work in brief	Target Date
Tally sheet to EDPM	3rd	WGR input	7th	Data receipt from PCO	5th
LS 10	5th	Input checking	9th	Listing.	10th
Ls 0,30,40 etc.,.	6th	Stores in correct W.O.s correction& validation	10th	ARD	11th
Handing over dummy pay rolls	6th	Outturn checking and ARD	11th	Labour data integration from WGR	12th
ARD	7th	Collection of WGR floppy	12th	Listing	13th
Validation	8th	Bill generation/JEs	16th	ARD for labour	14th
Checking	9th	Handing over to Book section	18th	Generation of cost statements	15th
				Correction if any & handing over to WC	16th

Book Section Floppy to HQ                           20th (due date)