TRAFFIC COSTING - LIMITATIONS & REMEDIES

LIMITATIONS	No	REMEDIES
generates aggregated costs for various facets of operations from the zonal railways as whole, whereas financial accounts are prepared division wise – vide variations in the costs from one zone to another which remains unexplained – the figures appear prima facie unreliable	1	Instead of concentrating on production of aggregate costs, should switch over to route wise costing in each division
major portion ( 75 %) of expenditure on repairs and maintenance is common to both coaching and goods – is bifurcated on assumptions which can be questioned	2	The Railway Reforms Committee suggested RITES to develop suitable parameters for apportionment of joint costs
traffic costing data is available only after 18 months of the close to the financial year by which time it is only historical interest and cannot be profitably used by management	3	Essential that the costing system should be integrated with the management information system( MIS) and provide useful traffic costing data in real time- with the computerization it should be possible for the IR to produce costing reports in time and quarterly instead of only once in a year so that the effect of seasonal variations in the cost of operation can be gauged
in the computation of cost the element of depreciation, interest, and freight charges have not been included in a scientific and reasonable proportion	4	The defect may be corrected
the variation in unit cost from one Zonal Railways to another and within a zonal railway from year to year should be studied in greater detail so that cost centers with wasteful and avoidable expenditure are identified and corrective and remedial measures are taken.	5	When the division wise costing is introduced the reasons for variation from one division with another in a zonal railway should be analyzed by concerned zonal railway and suitable steps taken to eliminate waste and control costs