P1636 Activity-based management; cost cutting: retaiier L01\" steinreddemetau sells books and Software over the intemet. A recent article in a trade journal has caught the attention of management. given that the company has experienced soaring inventory-handling costs. The article noted that similar rms have purchasing, warehousing and distribution costs that average 13 per cent of sales, which is attractive when compared with Bralnfoddemetau's results for the past year. The following information is available: Percentage of cost Percentage of oust Cost driver driver activity for driver activity for Activity roost} Coot driver quantity books software Incoming receipts ($600000) Number of purchase orders 2000 70% 30% Warehousing {$111000} Number of inventory moves 9001] 30 I!) Outgoing shipments ($450 mo) Number of shipments 150m 25 75 Book sales totaiied $? 300000 and software sales totalled $5 200000. A review of the company's activities found various inefficiencies with respect to the warehousing of books and outgoing shipments of software These inefciencies resulted in an extra 550 inventory moves and 250 shipments, respectively. Required: 1. What is activity-based management? What is a non-valueadded activity? 2. How much did non-vaiue-added activities cost Brainfoddennetau this past year? 3. Provide several examples of situations that may have given rise to non-value-added activities for Brainfoddertnetau. 4. 1Wilt the elimination of non-value-added activities allow Brainfoddemetau to achieve purchasing, warehousing and distribution costs that average 13 per cent of sales for each of the product lines? Show catculations. 5. Do either of the two product lines require additional cost cutting to achieve the target percentage? If so, how much additional cost cutting is needed. and what touts {methods} might the company use to achieve the cuts