A C D E F G H Background: Elon Musk, the man who is responsible for revolutionizing the automotive space is confused. Why you ask? He met with Ms. Static who explained to him that under the current allocation system, engineering costs amount to $46,880 per Model S and $15,630 per Model X. Elon responds: "How - Look at the Model X - its freaking awesome and is Insanely over engineered. How can it cost leass than our base model?\" he decides to hire you as a consultant to drive transperency into the costs . L ,,,,, ,0... ProblemDevelop ABCto clearithe' mess up Driver Cost Pool Activity Costs Cost Driver Machine Setup 5 360,000 Setup Hours 4,000 ' Materials Handling 5 100,000 Material (lbs) 20,000 1 Utility 5 40,000 Kw/hr 40,000 i l r 1 l . Information by Product Model 5 Model x 1 Units 4.000 20.000 l 1 Direct Materials 5 42,000 $ 54,000 7 l_ _> Direct labor 3 24,000 5 40,000 Setup Hours 200 240 Materials 1,000 3,000 , Kw/Hr 2,000 4,000 , E l l i l I lWhat is the "true" profitabilityof Model S and Model X l . , l i ll lWhat/ How do you suspect Ms. Statlc arrived at her numbers? l .7 l l l Iii IKnowing Tesla's business - are there additional things thatyou would look into In cost allocation? (Remember: Tesla has significant costs related to battery, R&D, software programming, Qaing, etc.) iv ishould Tesla evaluate customer profitability analysis or product profitability analysis? Defend your choice with at least 2 advantages. ' l 'l l I ' l