Assume that Tesla produces and sells 3 5 0 3 5 0 Model X ' ? s

Assume that Tesla produces and sells $350$ Model X$\text{'}$s in $2024.$ Compute the product cost per unit for Model X$.$

Transcribed Image Text:

Tesla Data Tesla Motors designs, develops, manufactures, sells and leases high-performance fully-electric vehicles and energy storage systems. Their 10-K boasts "we are the world's first vertically integrated sustainable energy company, offering end-to-end clean energy products, including generation, storage and consumption... we currently offer or are planning to introduce electric vehicles to address a wide rate of consumer and commercial vehicle markets, including the Model 3, Model Y, Model S, Model X, Cybertruck, Tesla Semi and a new Tesla Roadster". The following forecasted financial information has been gathered about Tesla Motors for 2024*: Model X, Model S, and Model 3 models sell for $120,000, $80,000 and $35,000 respectively. Each vehicle uses direct labor that costs, on average, $50 per hour. Its unit costs for each vehicle at this level of activity are given below: Selling Price Direct Materials Direct Labor Variable Manuf. Overhead Variable SG&A Model X Model S Model 3 $120,000 $80,000 $35,000 $30,000 $12,000 $10,000 $20,000 $15,000 $7,000 $7,000 $5,000 $2,000 $12,000 $8,000 $5,000 Tesla considers its traceable Fixed MOH to be avoidable and has $8.6 million, $11.2 million, and $10 million related to the Model X Model S, and Model 3, respectively. Tesla's common fixed SG&A costs of $40 million are deemed unavoidable and have been allocated to products based on relative sales price per unit. Common fixed SG&A expenses are allocated as $20.4 million to the Model X, $13.6 million to the Model S, and $6 million to the Model 3. *Numbers and data have been dramatically modified for access to data and for tractability purposes. Tesla Data Tesla Motors designs, develops, manufactures, sells and leases high-performance fully-electric vehicles and energy storage systems. Their 10-K boasts "we are the world's first vertically integrated sustainable energy company, offering end-to-end clean energy products, including generation, storage and consumption... we currently offer or are planning to introduce electric vehicles to address a wide rate of consumer and commercial vehicle markets, including the Model 3, Model Y, Model S, Model X, Cybertruck, Tesla Semi and a new Tesla Roadster". The following forecasted financial information has been gathered about Tesla Motors for 2024*: Model X, Model S, and Model 3 models sell for $120,000, $80,000 and $35,000 respectively. Each vehicle uses direct labor that costs, on average, $50 per hour. Its unit costs for each vehicle at this level of activity are given below: Selling Price Direct Materials Direct Labor Variable Manuf. Overhead Variable SG&A Model X Model S Model 3 $120,000 $80,000 $35,000 $30,000 $12,000 $10,000 $20,000 $15,000 $7,000 $7,000 $5,000 $2,000 $12,000 $8,000 $5,000 Tesla considers its traceable Fixed MOH to be avoidable and has $8.6 million, $11.2 million, and $10 million related to the Model X Model S, and Model 3, respectively. Tesla's common fixed SG&A costs of $40 million are deemed unavoidable and have been allocated to products based on relative sales price per unit. Common fixed SG&A expenses are allocated as $20.4 million to the Model X, $13.6 million to the Model S, and $6 million to the Model 3. *Numbers and data have been dramatically modified for access to data and for tractability purposes.

Answer rating: 100% (QA)

To calculate the product cost per unit for the Tesla Model X in 2024 we need to account for the direct materials direct labor variable manufacturing o... View the full answer