Case analysis Study Example | Topics and Well Written Essays - 1000 words - 4

Analysis - Case Study Example Each of these departments performs a specific task that relates to supporting the main goal of enhancing oil exploration and manufacturing activities. Oil is the main item for the company. Therefore, it is the main item considered as the cost driver for RDS. Monitoring of cost per barrel is a major indicator on the prospects of gaining profit or making loss. The parameter is a direct indicator on whether the company is taking right measures in their cost management. Given that cost per barrel depends on demand supply and other market shocks among other uncertainty this parameter gives a general outlook on the market behaviour and therefore essential for its efforts in managing costs. Besides, assessment of cost per barrel helps RDS examine their operating cost against other players in similar market segment. 2. Computing the cost of activities in the provide IT and Telecommunication services Provision of SAP support is an activity or the initiative of the parent company and, therefore, was not considered for calculations. Other parameters provide important accounting information for the analysis. There are several methods that assist in evaluating whether departments or products within a company are meeting the targets. Traditional costing method and the activity-based costing are the common approaches for products. However, is a department makes some sales or gets some income from their involvement in the business it is possible to determine their performance as well. These measures assess the market changes, uncertainties that may occur and their possible influence. However, comparison with other companies competing in the same market segment may give a better picture that could assist the company in evaluating whether selected activities are optimal. These analyses depicts that the barrel cost of oil is not the cost driver