Details

Case

Pakistan Railways

Wasif M Khan

INDUSTRY : Railways

AREA : Accounting & Control

ORGANIZATION : Pakistan Railways

LENGTH : 15

LUMS No : 01-335-89-1

PUBLICATION YEAR : 1989

KEYWORDS:

Pakistan Railways,PR,Transport,Logistics,Accounting,Control,Debt,Concept,Product Line

DESCRIPTION:

Hadi Hussain, Chief Commercial Manager of Pakistan Railways reviewed the consultant's report based on a one-year study of every PR train. The consultant recommended discontinuation of certain trains. Decision-making involved product (service) costs in order to find product-wise profitability. Once profitability had been assessed the information had to be analyzed with a view to retaining, discontinuing or enhancing the product line. The case also addresses the issue of relevant or differential costing. Underlying concepts involve the application of cost behaviour models, and cost allocation techniques to determine the full cost of providing a service. 

LEARNING OBJECTIVES:

The case was written to let students see the difficulty in estimating the costs for an organization with literally hundreds of products with considerable variation among them. Along with this they will realize that such information is indispensable if any organization is to operate profitably. Students will also learn to recognize the limitations of such accounuting based analysis for the purpose of discontinuing product lines.

SUBJECTS COVERED:

Accounting & Control