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.
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 …show more content…
CVP analysis is important when profit planning. It also is a significant part in such management decisions as setting selling prices, determining product mix, and maximizing use of production facilities (18.104.22.168). A change in any of the projected components will cause management to revisit CVP analysis for updated projections. A Cost-Volume-Profit Analysis also consists of the CVP income statement, break-even analysis, margin of safety, target net income, changes in business environment, and the CVP income statement revisited. Companies perform and revisited “CVP analysis to plan or adjust future levels of operating activity and provide information about: ▪ Products or services to emphasize ▪ The volume of sales needed to achieve a targeted level of profit ▪ The amount of revenue required to avoid losses ▪ Whether to increase fixed costs ▪ How much to budget for discretionary expenditures ▪ Whether fixed costs expose the organization to an unacceptable level of risk (22.214.171.124).”(Wiley 2012). Conclusion This paper has provided a detailed summary of Tesla Motors productions and expected production to reach breakeven point. The paper has outlined the two concepts from week four breakeven and CVP analysis that are assessed within the highlighted organization. The by and large the goal for Tesla Motors is to produce at the highest capability and turn over a profit.