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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

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
Problem: Develop ABC to clear the mess up
Cost Pool Activity Costs Cost Driver Driver
Machine Setup $ 360,000 Setup Hours 4,000
Materials Handling $ 100,000 Material (lbs) 20,000
Utility $ 40,000 Kw/hr 40,000
Information by Product Model S Model X
Units 4,000 20,000
Direct Materials $ 42,000 $ 54,000
Direct Labor $ 24,000 $ 40,000
Setup Hours 200 240
Materials 1,000 3,000
Kw/Hr 2,000 4,000
ii What / How do you suspect Ms. Static arrived at her numbers?

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