BookWeb, Inc., sells books and software over the Internet. A recent article in a trade journal has caught the attention of management because the company has experienced soaring inventory handling costs. The article notes that similar firms have purchasing, warehousing, and distribution costs that average 13 percent of sales. Thirteen percent is attractive to BookWeb management when compared to its results for the past year, shown in the following table: Activity (cost) Cost Driver Cost Driver Quantity % of Cost Driver for Books % of Cost Driver for Software Incoming receipts ($300,000) Number of purchase orders 2,000 70 % 30 % Warehousing ($360,000) Number of inventory moves 9,000 80 20 Shipments ($225,000) Number of shipments 15,000 25 75 Book sales revenue totaled $3,900,000 and software sales revenue totaled $2,600,000. A review of the company's activities found various inefficiencies with respect to the warehousing of books and the outgoing shipments of software. In particular, book misplacements resulted in an extra 550 moves and software had 250 incorrect shipments. 1.value: 10.00 pointsRequired information a-1. What is activity-based management? Creation and collection of activity-based cost information. Managing activities to change the mix of products away from more profitable to less profitable products. a-2. Under what circumstances is activity-based management useful? When product complexity is low and product volume varies insignificantly across product lines. When products consume varied amounts of multiple resources.

When product complexity is low and product volume varies insignificantly across product lines.