Wheelco Pty Ltd manufactures car and truck wheels. The company produces four basic, highvolume wheels used by manufacturers of large cars and trucks. Wheelco also has two speciality wheel lines. These are fancy, complicated wheels used in expensive sports cars. Lately, Wheelcos profits have been declining. Foreign competitors have been undercutting Wheelcos prices in three (3) of its four (4) major product lines, and Wheelcos sales volume and market share have declined. In contrast, Wheelcos speciality wheels have been selling steadily, although in relatively small numbers, despite three (3) recent price increases. At a recent staff meeting, Wheelcos managing director made the following remarks: Our profits are going down the tube. It costs us GH29 to manufacture our A330 wheel. That is our best seller, with a volume last year of 17,000 units, but our chief competitor is selling the same wheel for GH27. I do not see how they can do it. I think it is just one more example of foreign dumping. I am going to write to my local MP about it! Thank goodness for our speciality wheels. We must get our salespeople to push those wheels more and more. Take the H787 model, for example. It is a complicated thing to make, and we do not sell many, but look at the profit margin. Those wheels cost us GH49 to make and were selling them for GH105 each. Required: a. What do you think is behind the problems faced by Wheelco? Comment on the managing director's remarks. Do you think his strategy is a good one? What do you recommend, and why? Suppose the firms managing director has decided to implement an activity-based costing system. b. List and briefly describe the key features that Wheelcos new product costing system should include. What impact will the new system be likely to have on the company's situation? c. What strategic options are likely to be considered once the results of the new costing system are examined?