BP plc is analyzing its oil exploration costs using different costing methods:

• Requirements:
  • Calculate the Standard Cost per barrel of refined oil:
    • Direct Costs: $40
    • Indirect Costs: $20
• Implement Marginal Cost Accounting to assess the cost impact of exploring additional oil fields.
• Apply Activity-Based Costing to allocate environmental compliance and safety costs.
• Discuss how each costing method influences operational decision-making and cost control at BP.

Standard Cost Calculation:

Category	Amount per Barrel ($)
Direct Costs	$40
Indirect Costs	$20
Total Standard Cost per Barrel	$60