Work shop Manufacturing Suspense

Introduction:
Most of the workshops established in Indian Railways system are meant for
Repair & Maintenance of various kinds of Rolling Stock i.e. Locos, Carriages,
Wagons and other departmental vehicles. These units maintain WMS account
for the purpose of booking and clearance of expenditure on both for Plan
Heads and Revenue. The manufacturing suspense account is sourced from the
Capital under Plan Head 7200 and is part of Inventories of IR.

The production units also maintain WMS for the purpose of control over
expenditure mechanism.

These workshops also manufacture some of the components/duplicates,

spares and other tools and plant that are mainly used in on line maintenance
and off line maintenance so that operations of Rail traffic is facilitated to enable
earnings by the IR.

In addition to above the workshops also undertake building of rolling stock
such as assembling and manufacturing of rolling stock on a smaller scale.
 Man power – Planning & Control
 In IR workshops the manpower is identified as ‘Artisans’
staff and are deployed based on the ‘capacity’ of the
workshops that is laid. Man power ratio is derived at
based on a existing workshop norms or that may be laid
based on a time/work study.
 The Artisans are classified broadly in to 4 categories i.e.
Un skilled, Semi-skilled, Skilled and Highly skilled.
Composition of the above categories is based in the
requirement skills of the artisans and modernization
standards that are prevailing in the shops.
 In addition to above artisans the Supervisory staff and
support staff, and other administrative staff are also
planned based on the man power norms(ratio) and
capacity of the shops.
Man power – Operation of Labor Suspense
 This is operated based on the accrual concept of accounting.
As per the statute the artisan staff have to be paid their wages
based on the actual attendance. Accordingly the wages are
paid by 10th of the following month. As the wages pertaining to
previous period operation have to be brought to the actual
month of out turn this account is operated.
 The wages paid through salary bill are linked to the work order
transactions of each activity based on the predetermined
Average Hourly Rates of each category of staff.
 It is ensured to see that all the work orders are properly booked
with the actual labor cost and labor on cost and unit cost of
labor is arrived at.
 Time Sheets, Job Cards and WGR are reconciled with actual
wages paid in each shop and work shop as a whole to ensure
that there is no under charge of labor cost to final heads.
 Material management
 Materials required for the outturn in the workshop is
obtained by the shops from a) Depot attached to the
workshop (stock items) b) direct purchase from the
market(non stock items) c) materials drawn from other
workshops through transfers d) released/reclaimable
materials from the operations e) from other Railways and
divisions as the case may be for the targeted in the shops.
 Normally much of the materials is drawn from the
attached Stores Depot through a requisition form under
S.1313 or S.1813 as the case may be.
 S.1313 is known as Stores Issue Note based on which the
materials are issued by the attached to the shops
immediately after its requisition to cater to the needs of
out turn which is continuous and perpetual stock issues
are ensured for continuous activity.
 Material management -2
• Material procured through direct purchases: As soon as the
stores are received against the orders placed either by the
Controller of Stores or by an Officer of the Mechanical
Department the officer-in-charge of workshop should send a
copy of receipt note (S. 719) to the Workshop Accounts
Officer.
• On receipt of the receipt note referred to above, the Workshop
Accounts Officer should price it at the rate quoted therein,
after verifying the rate with that given in the Stores Order.
• The amount of the receipt note should then be journalised by
credit to "Purchases" and debit to "Workshop Manufacture
Suspense Account.'‘
• The amount thus debited to the head "Workshop Manufacture
Suspense" should be summarized by individual work orders in
a separate Stores Sub-ledger to be posted for each shop
separately in Form (W. 608) from the receipt notes received
from the officer-in-charge of workshop.
 Material management -3
 Materials drawn through DGSD contract or from other Rly
sources and other Govt departments are also accounted
for to the outturn of the shops.
 It is to be ensured by the management that at any point of
time that work should not be stopped for want of
materials.
 All kinds of Rolling stock components are identified
through a PL No. and accordingly stocking of material is
done and material drawals are based on the identification
of PL No. (Priced Ledger No)
 For the purpose of perpetual stock taking advance action
of procurement is ensured by the management.
 AAC(Average Annual consumption),SOH (Stock on Hand),
EOQ(Economic Ordering Quantity) are arrived at for each
item for the purpose of ideal procurement and to avoid
waexcess stocks by Railway.
 Workshop Finance and Accounts
 Finance, Accounting and Internal check of all workshop
transactions is done under the control of WAOs who are
directly reporting to the concerned CWMs and also to
FA&CAO/S&W and FA&CAO for the purpose of budgetary
control and control over expenditure.
 In addition to all other sections in any Accounts Office of
IR system there are additional sections such as
Workshop Accounts section and Stores Sectiotn
commonly known as WMS and PL sections supervise
and check the transactions of workshop outturn and
Stores drawals.
 Internal check of various workshop transactions takes
place under the control of WAOs which are related to the
expenditure on outturn and comparison of unit costs.
 Workshop Finance and Accounts - 2
 Work order system: All activities in a workshop are
identified with a work order No. POH, CR, SR or any other
Service or manufacturing activity is denoted with a
number for the purpose of the unit cost and cost control.
 What is a work order: work order is an authority to
commence work in a work shop. It is issued by PCO. No
work is under taken without assigning a number.
 The cost of materials and wages with the on-cost
against each work order is collected and posted in a
Register called Workshop General register(WGR).
 The expenditure on each work order is booked based on
the direct material drawn and direct wages and
predetermined %s of on costs and closed every month.
 Workshop Finance and Accounts - 3
 Work orders are classified into Direct work orders, Indirect
Work orders and Job orders.
 Direct work orders are identified with the activity and are
tend to close on completion of work or on completion of
batch or timely closures(periodicity) for the cost control
purposes.
 Indirect work orders are nothing but on cost work orders
and are meant for the purpose of allocation and
absorption of expenditure and for the purpose of
calculation of on cost %s to be used in the Work orders for
the levy of the on costs.
 Job order work orders are for the purpose of
manufacturing activity in a workshop and are used in Job
costing. They are commonly known as PGR Workorders. i.
e. Parts, groups and Repairs.
 Workshop Finance and Accounts - 4
 On costs/ Overheads are commonly called as ‘on costs’ and
are levied as a predetermined %s for each work and charged.
 In a workshop the on costs are 3 kinds they are 1.Shop on Cost,
2. General on-cost and 3. pro-forma on cost.
 The Indirect expenditure in common to all works in a shop is
known Shop on cost. i.e. General consumables in a shop,
Indirect worker’s wages, common machinery etc.,
 The Indirect expenditure incurred in common to all shops in a
workshop is called as General on Cost. i.e. Workshop
overhead lighting, Security, expenditure on traverser, watering
arrangements etc,.
 Proforma on Cost is administrative charges which include
proportionate expenditure on all supervisory services, Interest
and Depreciation charges and pensionary equivalents.
 All the on-cost charges are levied as % on direct wages of that
particular shops.
 Workshop Finance and Accounts - 5
 Workshop Manufacturing Suspense Account: It is a
Capital suspense account under PH7200. It is debited with
the total expenditure incurred on wages, materials, on
direct procurement of materials, carriage in wards, other
charges that are incurred for the purpose of outturn in the
shops.
 The opening balances and closing balances under WMS
account represent Works in progress and should be as
minimum as possible.
 The Credit side of the WMS account is posted with the
outturn on account of Revenue works carried out in the
workshop, manufactured items sent to shops, work done
to F.Rlys/Divisions and other workshops etc.
 It is checked to see that all the completed works are
cleared from the WMS A/c being a suspense account and
at all times matching grants are available in Revenue
Demands and Capital works grants so that no expenditure
on completed works remain outstanding in the WMS
account at the end of the year to avoid dividend liability.
 Workshop Finance and Accounts - 6
 Workshop Outturn Register: This is posted from the WGR
every month and is correlated with the physical outturn in
workshops. The outturn register is subject to review by the
unit Accounts officer monthly.
 Outturn Register is posted in 2 (two) parts. Part I is
representing the works completed and the financial
adjustments have been completed with in the month and
there is no out standing. Completed works are having
matching grants under Demands 5,6 &7 for which JVs are
prepared and cleared in the same month.
 Part II outturn register represents the value of the works
completed for which adjustments are yet to be made, and
also items under Works in progress.
 It is necessary that no amount is allowed to remain un
cleared in Part II outturn for want of funds, for want of
acceptance, for want of sanction etc.,
 Work order System
• The jobs under taken in a workshop based on a
work order should have proper authority and
planning and are processed by ‘Production
Control organization’ under the authority of Chief
Workshop Manager. Infrastructural capabilities
of each shop and its arising in the shops based
on the demand/requirement of the system so
assessed and matched to ensure that shop out
turn is fixed to the optimum capacity.
 Working Procedure
• The work orders issued for the purpose are
supposed to collect the Direct Labor, Direct
materials, Indirect Labor and Material (normally
known as on costs) for each job given and
Administrative on cost if any (known as
Proforma on cost for levying the works done for
outsiders) are linked to the each activity of work
i.e. POH of Rolling Stock, Corrosion Repairs,
Special Repairs, Manufacturing of works,
Components and spares.
 Working Procedure - WGR
• All the Work orders which were in operation
for collecting the charges for each activity
is collected through Workshop General
Register to ensure that all the expenditure is
reflected in the WMS A/c monthly.
• The WGR can be classified under two parts
Part I which is directly linked to the ‘Outturn’
statement .
• Part II linked to ‘Works in Progress’.
 WMS Account
• It is a process of collecting, valuating, analyzing and
booking of charges for carrying out of a work or service
in a workshop including manufacturing and producing
components. It is tool for settlement of all accounts
both for the debits and credits to the WMS A/c and
Contra debiting to the Revenue Demands, Plan heads
and transfers as the case may be based on the out turn
statement. The process is recorded in WMS A/c Current
under proforma W 1616. The total of Debits in WMS
indicate total expenditure of Work shop in a month/year
and Credits side of the WMS indicate clearances to the
WMS by debiting to Revenue Demands and Plan heads.
 Clearances of WMS A/c
• By Debit to Works: Expenditure incurred in
the month against the activity taken up on
account of Plan head works chargeable to
Capital, DRF,DF etc based on the completion
of works(Progress) or stage of the works
and to ensure that there should not be any
closing balance on this account. The
expenditure is progressively charged based
on the completion of works and are taken
up availability of funds.
 Clearances of WMS A/c
• By Debit to Works: Expenditure incurred in
the month against the activity taken up on
account of Plan head works chargeable to
Capital, DRF,DF etc based on the completion
of works(Progress) or stage of the works
and to ensure that there should not be any
closing balance on this account. The
expenditure is progressively charged based
on the completion of works and are taken
up availability of funds.
 Clearances of WMS A/c
• By Debit to Capital Suspense: Various
components manufactured and stocked for the
issue of the same on online units. This is based
on the quantities ordered on the Stores work
orders and is to be cleared based on the
completion of each work order and given contra
debit to Stores in Stock Account. Close
monitoring of Stores work order is to be ensured
to minimize the closing balance on this account.
This category is commonly known as PGR work
orders and is based on the grant available under
7100.
 Clearances of WMS A/c
• By Debits to Revenue: The expenditure incurred
on account of works such as POH, CR, SR and
other works are charged to Revenue Demands.
The expenditure for the month is struck as per
the time schedule and is correlated to the
physical out turn in work shop. As the work is
continuous in nature there bound to be a Closing
balance at any point of time and is required to be
closely monitored.
 Clearances of WMS A/c
• By Debits to Foreign Railway and other
Govt. Depts: The works are under taken
based on a deposit and the availability of
funds and will be cleared after physical
completion of the works. The POC
charged on this account is realizable and
credited to Z Earnings.
 Closing Balance
• The closing balance depicted on the WMS
A/c at end of the month/year is reflecting
i) Work orders which are in progress and
for completed ones for which the credit is
awaited ii) Un accepted debits for the
works carried out for reasons iii) Work in
progress iv) Un adjusted and over/under
charges awaiting adjustments for want of
funds.
Review of WMS for Managerial Control

• As normal rule that the Closing Balances

under WMS are required to be kept at the
level 3% of Gross Credits in the case of
Revenue works and at 6% of Gross Credits
in the case of Manufacturing works. As
such the following points are reviewed:
Review of WMS for Managerial Control

• Whether the materials and stores are drawn

disproportionately as compared to normal
requirements.
• Whether the progress of manufacturing of
spares for stocking is as per the targets and
should not result in accumulation in WMS
• Whether there is abnormal delay in Closing in
the workorders issued for spares and
components and works done out siders.
Review of WMS for Managerial Control

• Whether there is any delay in revision of

Average Hourly Rates and On Costs rates
chargeable to work orders.
• Whether proper deposit is available for taking
up the works in work shop in the case of jobs
for Private Departments and parties.
• Un accepted debits and charges by Foreign
Rlys and divisions and other Govt.
departments.
WMS Budgeting
WMS Budgeting
WMS Budgeting
WMS Budgeting
WMS Budgeting
 Payment by results – Incentive Scheme

 In order to increase the output in workshops the Incentive

Scheme has been introduced in the IR workshops initially
at CLW.
 As there is continuous demand for the work and limitation
to the infrastructural resources the management has to
utilize the capacity of shops to the maximum extant, it is
necessary that a system of ‘Payment by results’ to aim at
higher outturn in IR work shops.
 At present there are two types Incentive Schemes
prevalent in the IR known as CLW pattern, and RITES
pattern.
 Both the above systems have proved to be sustainable
and both the employer and employee are gained out of the
systems.
 Man power – Planning & Control
Payment by results – Incentive Scheme -CLW
 For the purpose of the Incentive Schemes the artisans are
classified into 3 categories i.e. Direct Workers, Indirect
Workers and Essentially Indirect Workers for the purpose of
CLW pattern incentive scheme. Direct workers are those
whose performance is directly identified with the out put.
Indirect Workers are support staff. Essentially Indirect Workers
are indirectly linked to the outturn without whom outturn is not
possible. Both DWs and EIWs are eligible for Incentive.
 Incentive payment is based on the individual performance of
the employee and based on his output.
 For the purpose of measuring the productivity ‘Allowed Times’
are the Yardstick. Time saved by an individual worker collected
through the Job cards is measured in terms of hours in a
month and accordingly payments made based on a rate fixed
for each category .i.e. Skilled, Semi skilled and Highly skilled,
MCM etc.,
 Man power – Planning & Control
Payment by results – Incentive Scheme –CLW-2
 All the activities in a workshop defined under various Allowed Times.
Activities may be a POH, Corrosion Repairs, Special Repairs and
manufacturing of a component or spare in a workshop.
 Allowed Times are so fixed that an average worker is also allowed
to gain incentive in the scheme by providing matching facilities.
 For example for a job If the Allowed Time is 90 Units Time taken by
an employee is 60 Units the Time Saved by him is 30 Units, there by
Incentive is 30 units. 1/3 of the Allowed Time.
rd

 In the case of an employee has taken 70 units of time his incentive

is 20 units, and if the time taken is 50 units though the time saved is
40 units there is restriction on the employee that his incentive is
limited to 50% of the time taken or 1/3 of Allowed time which is
rd

ever is lower. This will facilitate uniformity/quality standard in the

outturn of shops and to benefit both the employer and employees.
 Job cards are used for recording the Times in all shops where
Incentive scheme is implemented.
 Man power – Planning & Control
Payment by results – Incentive Scheme – RITES
Model
 For the purpose of this Incentive Schemes the shops are
classified into 3 categories i.e. Direct shops(Activity), Support
shops and Support departments Workers for the purpose of
RITES pattern incentive scheme.
 In the case of RITES incentive Scheme the payment is based
on a Group pattern and the increased physical outturn.
Support shops and Support departments are not eligible for
incentive. However the support shops where the incentive can
be linked to outturn they are also eligible for incentive.
 In this pattern the failures in the outturn after the activity is
completed with in the guaranteed time the penalties are levied
on employees.
 Group Cards(similar to Job cards) are used for measuring the
productivity in the shops.
 Idle Time in workshops

 Utilization of Manpower in the IR workshops is an

important task of the management. To achieve this
objective penalties have been levied on the Incentive
earned by the indirect workers i.e. supervisors for the idle
time caused in workshops due to administrative reasons
such as idle time for want of Materials, drawings,
instructions, power failures and other avoidable causes.
 In case the idle time is more than 15% of the time in a
shop no incentive is paid to the supervisors in the shops.
 Idle time on account of employee causes are to be
seriously viewed and such occurrences avoided by
corrective action to achieve the capacity of shops as per
the targets.
Thank You See you 36
 Workshop Accounts – Short Notes
Production Control Organization (PCO)
The objective of the PCO is to ensure continuous production
in the Workshops besides 100 % capacity utilization in the
shops. (W.111) It is the responsible for correlating the physical
out turn with Budgetary Control in the workshops rests with the
Associate Finance. (W.104)
PCO issues work orders for each activity and linking the same
with revenue allocation heads to ensure that there is control
over the out turn targeted and achieved.
WM is in-charge of PCO
Quality control, Inspection and physical outturn of the shops is
the responsibility of PCO
 Workshop Accounts – Short Notes
Process sheet

 Process sheet is an important factory forms

because it records full particulars of the item to be
manufactured, material specifications, allowed
times of operations involved, complete route of
production etc.
It is the basic record from which other important
factory forms emanate.
Process sheet is issued by the PCO. This
becomes basic document for rate fixing of
Allowed Time based on which labor component of
product at the end is depend.
 This form is followed by the Work order
 Workshop Accounts – Short Notes
Route card.

A Route card is an authority for the shops to undertake manufacture

of components / assembly for which work order is issued.
This is an exact replica of Process Sheet with adequate space
provided for the inspection staff to record the results of inspection or
checking on completion of each operation.(W. 916) .
The route card moves along with the component meant for
manufacture till such time the production is complete. The route card is
issued by the PCO and is linked with the Work-order issued for the
purpose.
The route card may be issued for one component for each work order
or maybe a group of components. On completion of manufacture of
components/parts the route card is submitted to Accounts department
for verification and reconciliation of same by the Cost Accountant for
fixing the cost price of the component.
On handing over the material to the stores depot the same is
acknowledged by Stores department and accordingly the Route Card is
 Workshop Accounts – Short Notes
Job Card

 A Job Card may be defined as a record that shows the time worked by a
workman on individual operations. The time taken by each operator On for
commencement and Off for completion thus arriving at to total time.(W.506)
Job Cards are printed by the PCO separately for each operation or part/
component.
Allowed Time, Time taken and Time saved by each operator against each
operation/component or part is recorded in a calendar month and thus total time
saved arrived at for drawing the Incentive bonus to individual employees.
On completion of operation the same is certified by the SSE of the shops for
the quantity passed and correlated with the process sheet issued for the
purpose.
Monthly Incentive bill is prepared on the basis of Job Cards that are issued and
are subjected to Internal check in the Accounts Office before arranging the
incentive payment for individual worker based on their earnings on each
operation.
Job cards may be issued for each individual or for a Group as the case may be.
Job Cards are used for both CLW and RITES pattern of incentive schemes.
 Workshop Accounts – Short Notes
What is the importance of Load Chart?

The LOAD CHART is very important in regulating

the work in Workshops because the issue of Work
Orders should be carefully regulated by the
Production staff with the help of these Load
Charts.
So that no job order, other than that for new
construction involving large outlay, is left
outstanding in the shops for more than three
months and no shop is loaded with work in
excess of two months' maximum out-turn of the
shop.
Workshop Accounts – Short Notes
The classification of Artisan staff in the workshops

. The classification of the artisan staff is as under

a. Highly skilled
b. Skilled
c. Semi skilled
d. Unskilled. (W.121)

What is Pro-forma on cost?

The Proforma on cost is commonly known as Indirect charges and
intended to include as General Administrative overheads which would
so be included in commercial costing. (W.702)

The cost of operation of General plant and machinery is chargeable to

which on cost?
The cost of operation of General plant and machinery is chargeable to
General on cost (Labour and Stores) (W.707)
 Workshop Accounts – Short Notes
How on cost charges are absorbed in the cost of production?
The on cost charges are absorbed through “Standing work orders”
issued separately.
What is a Time sheet?
Time sheet is a record that shows the time for which wages are earned by
each workman during a wage period for various works on which he has
been engaged. (W.503)
What is work order?
Work order is defined as an Authority to commence Work and incur
expenditure for any job under taken in a workshop.

What is a standing work order?

A standing work order is a work order which conforms to Revenue
Accounts classification and continues to remain unchanged year to
year. (W.807)
 Workshop Accounts – Short Notes
What is job order?
A job order is a work order issued for the purpose of manufacture
operations in a workshop and is used in job costing. (W 809)
What is the nature of WMS account?
WMS account is a Capital Suspense Account under Plan Head 7200
under Demand number 16. It is part of the Inventories of the Railway
Balance Sheet. The closing balances under WMS will carry dividend
liability to the general ex-chequer.
What is workshop General Register?
The compilation of expenditure booked under various work orders in a
summarized form is known as Workshop General Register (WGR) and
is prepared monthly. (W. 1201)
What is an Outturn statement?
An Outturn statement is a statement that shows the expenditure
incurred on completed works and incomplete works for which
adjustments have to be made during the month. Closing blances in the
Out turn statement agree with the outstanding balance under WMS
accounts. (W. 1204)
 Workshop Accounts – Short Notes
Why WMS is operated in Railways?

Railways are a commercial concern. Costs

incurred in their workshops affect maintenance
cost of the running the Railway. Any extravagance
in workshops is likely to tell upon the operating
costs resulting in erosion of profits.
It is therefore necessary to have proper cost
control over expenses incurred in workshops. For
this purpose a suspense head of WMS is needed
under which all expenses incurred in a workshop
are accumulated and analyzed so as to pinpoint
sources of waste and inefficiency.
 Workshop Accounts – Short Notes
RESUME ON WORKSHOP MANUFACTURING SUSPENSE ACCOUNT
• WMS is a capital suspense head of account under PH
7200 and forms part of inventories in the Railway Balance
Sheet.
• Hence, unusual balances and balances beyond the
specified limits attract Dividend Liability and is a point of
concern for the Zonal Railway.
• To ensure control over Expenditure of the Workshop
Manufacturing Operation (for the outturn of services and
manufacturing goods) the Suspense Head maintained to
enable WAOs to understand the outflow of cash element
wise i.e. Direct Labour, Direct Material, Direct Expenditure
vis-à-vis with outturn of the workshops.
 Workshop Accounts – Short Notes

Review of WMS Account identifies.

•Capacity utilization of the workshop.

•Deployment of skilled Labour and their utilization in Manufacturing

operations / Service operations (POH etc.)

•Close watch of material drawals to Shop Floor and their consumption

pattern.

•Identification of Quantum of On Cost as a percentage to Direct Labour

and control the overhead expenditure.
 Workshop Accounts – Short Notes
Review of WMS Account identifies

Depot Stores: Actual consumption of stores done through

form S-1313 by the Executive is passed through SMS JV and
is checked to see that the debits booked to WMS are correct
by ensuring correctness of rates and quantities (Abnormal
shop drawals).

Direct Purchase: Purchases made through Non-Stock Indents

are accounted under this element of item. Same are checked
to see that the Funds are available under PU - 04 and the
repeated purchases made through NS Indents are proposed
for stocking to attain the advantages of Bulk Purchases.
 Workshop Accounts – Short Notes
Review of WMS Account identifies

Miscellaneous Adjustments: Items under this head

are checked to see that Inter-Shop transfer of
materials should be as minimum as possible, since
abnormal transfer transactions indicates lopsided
planning by Production Engineer.

Discuss on financial implications

 Workshop Accounts – Short Notes
Review of WMS Account identifies

• Capital Stores Suspense:

• Manufacture Stores: The rates under manufacture stores
are checked to see that they are certified by the Cost
Accountant and are revised periodically.

• Returned Stores: While affording credit under Returned

Stores points to be checked are (I) Scrap items for their
rates (Borings, Turnings, Non-Ferrous Items). (ii)
Reclaimable items are identified and classified as "Stores
in Stock".
• CENVAT Credits
 Workshop Accounts – Short Notes
Revenue Operations: Linking of transactions

•Demand No. 6: The bookings to Demand No.6 (Repairs to Carriage &

Wagons), are taken from the total expenditure appearing against the
individual Standing Work Orders, separately under the heads labour and
Stores.
• The labour component of the expenditure in the WGR is based on the
total labour hours against each work order multiplied with the Average
hourly Rates of respective categories of Artisan Staff, while that of the
stores portion is taken from the drawals of stores indicated in the Issue
Notes, Work Order wise.
• The expenditure booked through the Standing Work Orders are reviewed
to see that the same are closed every month and co-related with the
physical out turn.
 Workshop Accounts – Short Notes

•Demand N0.7: All the works relating to

workshop Machinery and Tools, Service Motor
Cars, Cranes and other unclassified equipment
in the workshop are carried out against different
work orders.
• As is done in respect of Demand No.6 above,
the bookings of Labour and Stores are extracted
from WGR, Work Order wise as well as activity
wise and finally cleared to Demand No.7 with
Corresponding credit to WMS Account.
 Workshop Accounts – Short Notes
Miscellaneous Manufacturing Revenue:
Generally, a transaction pertaining to sparing to
material, Wheel Sets, Cost of execution of
Divisional Work Orders are accounted for under
the subject head.
Debits have to be raised on the units on a monthly
basis.
Work orders have to be closely monitored to
ensure that they have to be cleared with in the
financial year for which revenue grants are
available.
Discuss Financial implications:
 Workshop Accounts – Short Notes

The following points need scrutiny

That the rates at which the debits are passed on to other units are as
per the latest books rates and sparing of material does not in any way
resulting shortages in the shops.

•The rates charges for wheel sets are as per the latest PL number.

With respect of Divisional Work Orders, it must be ensured that the

expenditure incurred on Labour and Stores Elements are charged
to the consignees in full together with the overheads.
 Workshop Accounts – Short Notes

Monthly Review of Balances

under WMS
• All items are current, under
taken upon issue of proper
Work Order under sanction of
CA
 Workshop Accounts – Short Notes

Costing & Cost control in Railway Workshops

Introduction:
The expenditure incurred in workshops, Sheds and Depots is
required to be watched closely so that thee is no wastage,
idle ness and loss is involved in activities.

The volume of activities in maintaining the Rolling Stock is

predominantly high and at every level of functioning the costs
are required to be controlled to minimize the working
expenditure in these Revenue Demands i.e. Demand No. 5.
Demand No.6 and Demand No.7.
 Workshop Accounts – Short Notes

Expenditure incurred
• The expenditure incurred for the work done in a
workshop is made up the following elements, i,e, Prime
Cost, Works Cost, Frieght, Proforma on Cost. Prime
cost comprise of Labor, Material, Works on Cost
comprise of Shop on cost, and General Cost, and
Proforma on cost of comprise of Supervision,
Contribution towards PF and Pension, Repairs and
Maintenance charges, and Interest and Depreciation. It
is required that all Jobs are directly charged with
Labor and Material and oncost charges are distributed
amongst the various jobs in proportion to labour
charges.
 Workshop Accounts – Short Notes

Work order System: Work order is the authority to

commence work in work shop. Various work orders
issued for each of the activities and the expenditure is
collected through these work order element wise i.e.
Labor, Material and On costs. The expenditure involved in
each activity i.e. POH of a BG Coach, Corrosion Repairs,
Special Repairs, Rehabilitation of Coach, work order for
each king of small parts and spares, profiles etc.,
similarly to the Wagons and Locos. Each work order
collects the data monthly and the same is posted in a
register known as Work shop General Register so that a
review can be made against each work order to control
the costs.
 Workshop Accounts – Short Notes
Work orders-
Kinds
• Work orders are Revenue work orders, Other
standing work orders, Capital and other source
funds work orders. Revenue work orders relate to
each maintenance activity i.e. POH, CR,SR etc.,
Other Standing work orders are: Oncost work
orders, Manufacturing work orders, Grouping
work orders, Interdepartmental work orders,
Capital work orders are: Building of a LOCO,
Carriage, Wagon or any other assets or
rehabilitation/rebuilding works.
 Work orders - 2
• Each work order should be issued by a competent
authority. It is also checked to see that the sufficient
funds are available so that after completion of the work
the same will be debited to the Unit.
• For the works under taken towards employees, other
government departments, outsiders etc., necessary
proforma on cost is to be levied and ensured.
• For the works to be taken up for the other departments
necessary funds are deposited or not.
• Estimates are prepared in advance for the work orders
of nature of asset building and rehabilitation etc.,
 Workshop Accounts – Short Notes

The objective of Costing System:

• The works involved are large in No. the
cost of such repairs and maintenance
under detailed heads of accounts under
each abstract so that costs are controlled
and assessed properly charged to the
Units/Consignees. The objectives of
Costing system:
 Workshop Accounts – Short Notes
The objective of Costing System:
• to throw light on past experience and to locate profits or
losses on previous work
• to act as a guide for future transactions and locate idle
time.
• to compare different methods of manufacturing the
same article
• to appreciate in what ways overhead expenditure may be
reduced
• to check employees and prevent waste whether
intentional or accidental
• to locate particular item of work or of operation,
expenditure on which is susceptible for cost control.
 Workshop Accounts – Short Notes

The objective of Costing System:

• To identify the variations of costs between
the various work shops in the Railway and
workshops of other Railways.
• In the case of special works to charge on
differential rates based on the necessity.
• To provide managerial information for
taking ‘Make or Buy’ decisions.
Wish You All the Best
64