QUESTION 2: Gynriostsehetl Inc is a major distributor of medical equipment based in Seattle, Washington. The company purchases the medical equipment from a wholesaler, (terms 2/10, n/30 FOB shipping point) and resells them to hospitals and other HealthCare providers all over the Pacific Northwest (the wholesaler buys the equipment from an overseas manufacturer). The company has built a reputation of quick delivery time, and has an owned fleet of vehicles that deliver equipment to customers. The equipment sold range in size from heavy machines for hospitals to small equipment (tool type and supplies) for hospitals, dental clinics, and medical massage parlors. Gynriostsehetl Inc sets all its prices for all customers by marking up its cost of goods sold to those hospitals by 31 %. For example, if a customer buys equipment (supplies) that had cost $100, Gynriostsehetl Inc would charge the customer $131. The margin seemed sufficient in the past, but with rising costs, and inability to increase selling prices due to competition, the company is looking for ways to reduce its costs. The company broke its selling and administrative expenses into five activities (cost pools) as shown below (for the year 2016)