PAKISTAN RAILWAYS

Abstract

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 behavior models, and cost allocation techniques to determine the full cost of providing a service.