Question: Tesla is considering whether to continue manufacturing a specific car model. The following data is available: Sales Revenue: $5,000,000 Variable Costs: $3,000,000 Fixed Costs: $1,500,000

Tesla is considering whether to continue manufacturing a specific car model. The following data is available:

  • Sales Revenue: $5,000,000
  • Variable Costs: $3,000,000
  • Fixed Costs: $1,500,000
  • Alternative Use of Facilities: $1,200,000
  • Disposal Value of Equipment: $500,000

Requirements:

  1. Prepare a Differential Analysis to decide whether to continue or discontinue the car model.
  2. Calculate the Net Differential Income.
  3. Analyze the impact of the alternative use of facilities.
  4. Prepare a recommendation report for Tesla.

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