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Cost Allocation and Performance Evaluation at Mitsubishi Requirements: Develop a cost allocation method for Mitsubishi's production facilities to allocate overhead costs to different vehicle models.

Cost Allocation and Performance Evaluation at Mitsubishi

Requirements:

  1. Develop a cost allocation method for Mitsubishi's production facilities to allocate overhead costs to different vehicle models.

Vehicle Model

Direct Costs per Unit ($)

Overhead Costs ($)

Eclipse Cross

25,000

12,000,000

Mirage

20,000

10,000,000

  • Implement an activity-based costing (ABC) system to allocate manufacturing overhead costs to Mitsubishi's Eclipse Cross and Mirage models.
  • Evaluate the accuracy of cost allocation methods in measuring the profitability of each vehicle model at Mitsubishi.
  • Recommend cost allocation improvements to enhance decision-making and performance evaluation at Mitsubishi.

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