Telsa Motors, Incorporated
As upper-level management it is important to understand the key components of cost-volume-profit analysis. Identifying objectives including concepts related to CVP is crucial to the absorption of information. The paper provides a summary of Tesla Motors, the company outlined. Explaining the relationship between cost-volume-profit analysis is discussed as well as how the company is using this tool to maximize production and profit. Summary
Tesla Motors, Inc. is a company based in Silicon Valley. Telsa designs, manufactures, and sells electronic cars. Telsa is a publically traded company that trades in NASDAQ stock exchange. Telsa became well known after producing the Telsa Roadster, the first fully equipped eclectic sports car. In addition, Telsa also sells power train components like lithium-ion batteries to other auto makers. According to Morris (2012), “CEO Elon Musk announced that the company has stopped burning cash and reached the break-even point, a major milestone for any start-up.”(Morris, 2012). Tesla has been producing 200 cars per week and according to the article, Tesla expected to increase that quantity to 400 cars per week by December 2012. Although Tesla has reached its break-even point, their concern at this point is to fulfill the more than 5,000 advanced orders as they understand the importance in making sure the customers get what they ordered and meeting profit goals. Weekly Objectives Relevance
Two essential accounting concepts can be applied in understanding Tesla’s economic position: 1) cost – volume - profit (CVP) analysis and 2) the breakeven point. First, a cost-volume- profit (CVP) analysis is defined as "the study of the effects of changes in costs and volume on a company's profits" (Kimmel, Weygandt, & Kieso, 2009). In the case of Tesla’s current state, it appears a proper CVP analysis was conducted because Tesla effectively overseeing production costs and keeping expenses low...
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