1. Calculate the UOC per barrel for SG. Is a barrel of oil the cost driver for all the activities that go on within RDS? Comment on why RDS chooses to monitor costs per barrel.
The UOC per barrel for SG is $3.21. OPEX | $140,640,200 | 120,000 | barrels/day | | | 365 | days/year | Total | $140,640,200 | 43,800,000 | barrels/year | Unit Operating Cost (UOC) | $3.21 | | |
*UOC = (Total Operating Expense – Exploration – Depreciation & Depletion) / Barrels Produced
Barrels of oils produced may be a cost driver for some activities in RDS, but not all activities are driven by the production of oil. RDS has other activities that requires significant expenditures as the headquarter. The capital investment on exploration for various…show more content… Criteria must be established to define what constitutes timeliness for a given unit of work. The criterion is usually based on customer requirements. Everything listed above could fit in this category too |
4. Calculate the UOC per barrel for each process in the Business Management Department.
Cost for Business Management Processes | | | | | | Activities Performed | | UOC per barrel | Provide Goods & Services | | | Select Vendors | 120,000 | 0.00 | Purchase Goods and Services | 257,000 | 0.01 | Warehouse and issue goods | 355,000 | 0.01 | Total | $732,000 | $0.02 | Provide IT and Telecommunication Services | | | Select, install, operate, support hardware & software | 1,499,000 | 0.03 | Provide SAP Support | 1,075,000 | 0.03 | Provide Telecommunications | 5,421,000 | 0.12 | Total | $7,995,700 | $0.18 | Provide financial Services | | | Manage Funds | 1,192,000 | 0.03 | Execute Accounting | 1,037,000 | 0.02 | Provide Financial Reports | 683,000 | 0.02 | Provide Specialist Services & Reports | 997,000 | 0.02 | Total | $3,909,000 | $0.09 | Perform Internal Audits | | | Assess Risks | 75,000 | 0.00 | Prepare Mitigation Plans | 75,000 | 0.00 | Document Internal Controls | 50,000 | 0.00 | Develop & Implement Controls | 100,000 | 0.00 | Audit Balances & Controls | 225,000 | 0.01 | Provide Advice | 50,000 | 0.00 | Total | $575,000 | $0.01 | Prepare Economic Plans | | | Update Review
