Tesla Inc. conducts cost-volume-profit analysis for a new model of electric vehicle. In March 2037, the company estimates the following costs:

• Fixed Costs: $80,000,000
• Variable Cost per Vehicle: $40,000
• Selling Price per Vehicle: $80,000

Requirements:

1. Calculate the Contribution Margin per Vehicle:
   • Determine the contribution margin per vehicle.
   • Show the contribution margin ratio.

1. Determine the Breakeven Point:
   • Calculate the breakeven point in units.
   • Calculate the breakeven point in dollars.

1. Analyze the Profitability:
   • Determine the number of vehicles Tesla needs to sell to achieve a target profit of $20,000,000.
   • Prepare a CVP graph showing the breakeven point and the target profit point.

1. Sensitivity Analysis:
   • Evaluate how a 10% increase in selling price affects the breakeven point.
   • Analyze how a 20% decrease in variable costs affects profitability.

1. Decision-Making:
   • Discuss whether Tesla should proceed with production based on the CVP analysis.
   • Provide recommendations on pricing and cost management strategies to enhance profitability.