Shell Gabon Case Study
Shell Gabon
11/6/2014
Cost Accounting
Case Study
1. The UOC is calculated by dividing the total operating cost, excluding exploration, depreciation, and depletion by the barrels produced. In the case of RDS not all activities can be traced directly to a barrel of oil. There are departments such as Human Resource Management and Business Management that are not directly related to this measure. It makes sense for RDS to use barrels as the primary cost driver due to the large cost of the Production Management department. The barrel measurement is directly related to production related costs, and production related costs are the largest percentage of total operating expenses. See the UOC calculation below. 120,000 bpd * 365 days = 43,800,000 barrels per year Total operating costs less Exploration = $140,359,880 UOC = $140,359,880/43,800,000 = $3.20 per barrel
2. The cost of activities in the Provide IT and Telecommunications Services process is summarized below. Select, install, operate, support hardware & software Staff Salaries 724 Staff Benefits 253 Staff Services 217 Service Contracts 21 Licenses & Subscriptions 235 Materials & Supplies 45 Training 4 Total: 1,500 Provide SAP Support Staff Salaries 632 Staff Benefits 221 Staff Services 190 Materials & Supplies 26 Training 6 Total: 1,075
Provide Telecommunication Services Staff Salaries 2,242 Staff Benefits 784 Staff Services 672 Service Contracts 1,103 Licenses & Subscriptions 43 Materials & Supplies 130 Training 446 Total: 5,420 Included in the costs for the IT/Telecom services process are all costs that are directly related to the services. The source for these costs is the ERP system with an additional 65% of salary for benefits and staff services. Also included are all resource drivers for indirect costs including materials and supplies as well as training costs. These costs are all
11/6/2014
Cost Accounting
Case Study
1. The UOC is calculated by dividing the total operating cost, excluding exploration, depreciation, and depletion by the barrels produced. In the case of RDS not all activities can be traced directly to a barrel of oil. There are departments such as Human Resource Management and Business Management that are not directly related to this measure. It makes sense for RDS to use barrels as the primary cost driver due to the large cost of the Production Management department. The barrel measurement is directly related to production related costs, and production related costs are the largest percentage of total operating expenses. See the UOC calculation below. 120,000 bpd * 365 days = 43,800,000 barrels per year Total operating costs less Exploration = $140,359,880 UOC = $140,359,880/43,800,000 = $3.20 per barrel
2. The cost of activities in the Provide IT and Telecommunications Services process is summarized below. Select, install, operate, support hardware & software Staff Salaries 724 Staff Benefits 253 Staff Services 217 Service Contracts 21 Licenses & Subscriptions 235 Materials & Supplies 45 Training 4 Total: 1,500 Provide SAP Support Staff Salaries 632 Staff Benefits 221 Staff Services 190 Materials & Supplies 26 Training 6 Total: 1,075
Provide Telecommunication Services Staff Salaries 2,242 Staff Benefits 784 Staff Services 672 Service Contracts 1,103 Licenses & Subscriptions 43 Materials & Supplies 130 Training 446 Total: 5,420 Included in the costs for the IT/Telecom services process are all costs that are directly related to the services. The source for these costs is the ERP system with an additional 65% of salary for benefits and staff services. Also included are all resource drivers for indirect costs including materials and supplies as well as training costs. These costs are all