Brainfodder.net.au sells books and software over the internet. 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 firms have purchasing, warehousing and distribution costs that average 13 per cent of sales, which is attractive when compared with Brainfodder.net.au's results for the past year. The following information is available: Percentage of Percentage of Cost driver cost driver activity cost driver activity Activity (Cost) Cost driver quantity for books for software Incoming receipts Number of purchase orders 2 000 70% 30% ($600 000) Warehousing ($720 000) Number of inventory moves 9 000 80 20 Outgoing shipments Number of shipments 15 000 25 75 ($450 000) Book sales totalled $7 800 000 and software sales totalled $5 200 000. A review of the company's activities found various inefficiencies with respect to the warehousing of books and outgoing shipments of software. These inefficiencies resulted in an extra 550 inventory moves and 250 shipments, respectively. Required: 1. What is activity-based management? What is a non-value-added activity? 2. How much did non-value-added activities cost Brainfodder.net.au this past year? 3. Provide several examples of situations that may have given rise to non-value-added activities for Brainfodder.net.au. 4. Will the elimination of non-value-added activities allow Brainfodder.net.au to achieve purchasing, warehousing and distribution costs that average 13 per cent of sales for each of the product lines? Show calculations. 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 tools (methods) might the company use to achieve the cuts