Implementation of ABC Model for Aurizon Holdings Limited

Implementation of ABC Model 0
ACTIVITY BASED COSTING
MODEL

Implementation of ABC Model 1
Executive Summary:
In this report, the case of Aurizon Holdings Limited has been analysed. The company is the
largest rail transportation business operator and is listed on Australian Stock Exchange. The
main objective of the company is to generate sustainable returns for its business and other
stakeholders such as shareholders and employees. In order to improve its profitability
condition the company is considering the proposal of implementing the most advanced tool
of cost management accounting i.e. Activity Based Costing Model. The implementation of
the said model will improve the overhead allocation of the company which will ultimately
improve its cost determination process. As a part of this report, certain other techniques of
cost management accounting i.e. CVP analysis, BEP and MOS sales have been discussed.

Implementation of ABC Model 2
Table of Contents
Vision, mission and objectives of the Aurizon Holding Limited:............................................................3
Mission of Aurizon Holding Limited:..................................................................................................3
Objectives of Aurizon Holding Limited:..............................................................................................3
Corporate strategy of Aurizon Holding Limited:................................................................................3
Recommendations for the successful implementation of ABC Model in Aurizon Holdings:..................4
Conclusion:............................................................................................................................................4
Table of Figures:
Figure 1: ABC Model for Rail Transport.................................................................................................4
Figure 2: Overhead Allocation under ABC.............................................................................................5

Implementation of ABC Model 3
Introduction:
Aurizon Holdings Limited is the largest heavy haul freight operating Railway Company that
is listed on Australian stock exchange. It is one among the top 100 ASX companies. The
company provides its customers with integrated solutions relating to freight and logistics
across an extensive rail and road network covering the entire Australia. It operates through its
subsidiaries and owns one of the giant most coal rail networks that link around 50 mines
along with 3 prime ports of Queensland. It transports different commodities like mining,
agriculture, industrial products, coal, iron ores and retail goods as well groceries across the
small or big towns or cities of the country. It also owns and manages Queensland’s central
coal network that covers 2670 kilometres. Also, it provides several specialist services like rail
designing and engineering, construction and maintenance and supply chain solutions. In this
report, the application of activity based costing model on Aurizon Holdings Limited has been
examined. Activity based costing is the key model of cost management accounting studies.
Use of ABC Model can improve the quality of decisions of the managers of the company as it
serves them with the relevant and useful information regarding the cost of the products and
services in which the company is dealing so as to determine the customer profitability.
About ABC Model and its attributes: