A value stream has three activities and two products. The units produced and shipped per week are 50 of the deluxe model (Model A) and 150 of the basic model (Model B). The resource consumption patterns are shown as follows:

Required:
1. Calculate the ABC product cost for Models A and B.
2. Calculate the value-stream average product cost. Assuming reasonable stability in the consumption patterns of the products and product mix, assess how well the products are grouped based on similarity.

Costs of Value Stream Activities Model A Model B Cell manufacturing Engineering Testing 2,400 min 60 hrs 100 hrs 7,200 min 260 hrs 220 hrs S 76,800 27,200 24,000 Total $128,000