Question: Strategic Cost Allocation and Transfer Pricing at Shell Requirements: Develop a cost allocation strategy for Shell's global operations, including upstream and downstream oil and gas

Strategic Cost Allocation and Transfer Pricing at Shell

Requirements:

  1. Develop a cost allocation strategy for Shell's global operations, including upstream and downstream oil and gas activities.

Cost Allocation Strategy

Allocation Basis

Implementation Plan

Exploration and Production

Reserves and drilling complexity

Cost categorization and operational metrics

Refining and Marketing

Production volume and market dynamics

Activity-based costing and price variance analysis

Distribution Costs

Shipping distance and logistics

Route optimization and logistics network analysis

  1. Determine transfer pricing mechanisms for inter-regional transactions to optimize tax efficiency and divisional profitability.
  2. Evaluate the impact of cost allocation strategies on Shell's financial performance and operational effectiveness.
  3. Recommend transfer pricing policies aligned with Shell's strategic goals and regulatory compliance.

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