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Wheels Company produces two different products, Bicycles, which sells for $3,000 per unit, and Scooters, which sells for $6,000 per unit, using three different
Wheels Company produces two different products, Bicycles, which sells for $3,000 per unit, and Scooters, which sells for $6,000 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Design (Engineering Hours) Machining (Machine Hours) Inspection (Batches) Cost $1,500,000 Usage by Bicycles 500 Usage by Scooters 500 $5,000,000 $ 300,000 2,800 30 5,200 90 Wheels manufactures 12,500 units of Bicycles and 8,450 units of Scooters per month. Each unit of Bicycles uses $300 of direct materials and $400 of direct labor, while each unit of Scooters uses $850 of direct materials and $450 of direct labor. Required: a. Calculate the Design activity proportions for Bicycles and Scooters. Design Activity Proportions Product A % Product B %
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