Case Study – Activity – Based Management in Shell Gabon
Case Study – Activity – Based Management in Shell Gabon
Case Requirements
1. SG TOTAL UOC per barrel = $140,640,200/(120,000 barrels/day * 365 days/year) = $3.21/barrel
Barrels of oil produced is a cost driver for some of the activities in RDS, but not all are driven by production of oil. UOC = Total Operating Expense (OPEX) excluding exploration, depreciation, and depletion therefore there are other activities like exploration, new capital equipment for exploration, research and development, depreciation on equipment, and depletion are costing money whether you are making oil or not.
RDS is monitoring costs per barrel and SG assembled the CLT team to learn how to control costs in order to get funding for off shore oil exploration and keep the oil price below $16.71 per barrel in order to stay competitive according to an industry report. SG assembled the CLT team because headquarters mandated that investment and development funds would be allocated only to those subsidiaries that demonstrated a serious commitment to cost management and they need this backing in order to stay competitive and in business.
2. The costs of the activities in the Provide IT and Telecommunications Services process are below. This is an edited part of Table 5 that is shown in entirety in question #4 that I generated for that question. Provide IT and Telecommunications Services | | Select, install, operate, support hardware and software | $ 1,499,000 | Provide SAP support | $ 1,074,000 | Provide Telecommunications | $ 5,421,000 | Total | $ 7,995,000 |
The items included in these calculations are the direct costs from Table 3 and the indirect (allocated) costs from Table 4. The first 3 columns of numbers from these graphs correspond to the Table 5 question marks that we are looking for. Included in these calculations are the staff benefits which are 35% of the staff salaries and the staff services which are 30% of the staff salaries.
Case Requirements
1. SG TOTAL UOC per barrel = $140,640,200/(120,000 barrels/day * 365 days/year) = $3.21/barrel
Barrels of oil produced is a cost driver for some of the activities in RDS, but not all are driven by production of oil. UOC = Total Operating Expense (OPEX) excluding exploration, depreciation, and depletion therefore there are other activities like exploration, new capital equipment for exploration, research and development, depreciation on equipment, and depletion are costing money whether you are making oil or not.
RDS is monitoring costs per barrel and SG assembled the CLT team to learn how to control costs in order to get funding for off shore oil exploration and keep the oil price below $16.71 per barrel in order to stay competitive according to an industry report. SG assembled the CLT team because headquarters mandated that investment and development funds would be allocated only to those subsidiaries that demonstrated a serious commitment to cost management and they need this backing in order to stay competitive and in business.
2. The costs of the activities in the Provide IT and Telecommunications Services process are below. This is an edited part of Table 5 that is shown in entirety in question #4 that I generated for that question. Provide IT and Telecommunications Services | | Select, install, operate, support hardware and software | $ 1,499,000 | Provide SAP support | $ 1,074,000 | Provide Telecommunications | $ 5,421,000 | Total | $ 7,995,000 |
The items included in these calculations are the direct costs from Table 3 and the indirect (allocated) costs from Table 4. The first 3 columns of numbers from these graphs correspond to the Table 5 question marks that we are looking for. Included in these calculations are the staff benefits which are 35% of the staff salaries and the staff services which are 30% of the staff salaries.