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.