Question 2 Wheelies assembles and sells racing bicycles. Over the years, it has built up a name in the market. for its state of the art design and high performance quality in its products. Due to this strong reputation, it is able to command a premium price in its bicycle sales. However, profit performance has not been up to expectation and this has led Wheelies to consider various cost reduction possibilities. Not good In an attempt to improve profit. Wheelies reduced the training it provided to its manufacturing staff during the latest year and cut back on the level of inspection performed on the bicycles. The following actual selling price and cost information is available for the latest year: $ per bicycle Selling price 2,025 Frame cost 1,230 Other material cost 128 $1,508 Assembly cost 150 Delivery cost 22 Contribution 495 Annual information for the latest year Inspection costs (manufacturing) $3,450,000 Appraisal Staff training costs $1,170,000 Prevention Total cost of dismantling and reassembling (per bike) $270 IF Collection cost of faulty bike $35 EF Estimated market size (no. of bicycles) 2,500,000 Additional information for the latest year: 3,000 faulty (1) 3,000 completed bicycles were found to have a faulty frame before delivery to the customer. Each faulty frame had to be replaced and the bicycle had to be re-assembled. Wheelies is unable to recover the cost of faulty frames from the supplier as the supplier has gone into liquidation. (2) Wheelies had to replace 1,500 bicycles that had already been delivered to customers due to a failure of the frame. (3) Wheelies estimated its market share to fall to 8% from a forecast of 9% due to adverse customer reaction as a result of criticism in the social media platforms. . current market sike size Part A . 1% declue = 1%. x 2, 5",... (a) Prepare a cost of quality report for Wheelies for the latest year, showing the 25,600 bike appropriate quality cost category in your answer. (12 marks)(b) Critique the relationship between conformance costs and non-conformance costs for Wheelies and its implications if Total Quality Management (TOM) philosophy is to be implemented. (10 marks)