Stunt Ltd is a manufacturer of stunt scooters used for performing tricks and stunts in skate parks. A customer survey reveals that customers look for the following product attributes when purchasing a stunt scooter:

With the help of the production and design staff, the management accountant uses the above information to construct the following matrix of the product attributes. This shows how each component of the Slammer contributes to the supply of product attributes:

Required

(a) Calculate an importance index for each of the Slammer scooter’s three components. What does it indicate about the relative importance of each component in providing the attributes that customers require?

(b) Using the target cost information, prepare a strategic cost index for each of the Slammer’s three components. Discuss whether this design incurs too much expenditure on any component.

Transcribed Image Text:

Attribute Relative importance % Safety 10 Style 40 Performance 50 Total 100 The company is designing a new model called the Slammer. Each Slammer consists of three components, whose target costs are estimated below: Components Handlebars and steering column Painted aluminium footplate Wheels and suspension Target cost per scooter % of total cost 20 33.33 30 50.00 10 16.67 60 100.00