Tesla Motors, Inc., is a Silicon Valley– based company that engineers and manufactures electric cars. The Tesla Roadster, the company’s first vehicle, can travel 244 miles on a single charge of its lithium- ion battery pack and can accelerate from 0 to 60 mph in 3.7 seconds. The Roadster starts at a steep price of $ 109,000. However, many customers believe that the benefits of an electric car— decreased dependence on foreign oil, zero emissions, and a cost of less than 2 cents per mile driven— far outweigh the cost.
In addition to the Roadster, Tesla is working on manufacturing a more budget- friendly electric car, the Model S. With production scheduled to begin in late 2011, the Model S has an anticipated base price of $ 49,900 and will have a range of up to 300 miles.
Manufacturing companies such as Tesla Motors use different accounting procedures than service and merchandising companies use. Discuss some of the basic differences between accounting for a merchandising business and a manufacturing entity. What type of costing system do you think Tesla Motors, Inc., uses? Why?