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
iv	Should Tesla evaluate customer profitability analysis or product profitability analysis? Defend your choice with at least 2 advantages.