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.

How much additional cost cutting is needed to achieve the target percentages?

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. Cost Driver Quantity % of Cost Driver for Books % of Cost Driver for Software 2,000 70% Activity (cost) Incoming receipts ($300,000) Warehousing ($360,000) Shipments ($225,000) Cost Driver Number of purchase orders Number of inventory moves Number of shipments 9,000 15,000 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. e-1. Do either of the product lines require additional cost cutting to achieve the target percentages? e-2. How much additional cost cutting is needed to achieve the target percentages? Complete this question by entering your answers in the tabs below. Req E1 Req E2 How much additional cost cutting is needed to achieve the target percentages? Additional cost cutting