A firm uses activity-based costing and has the following activity rates: $100 per machine hours, $500 per batch start, $5 per order.

The firm has two several products, including the following two.

Product 1: $44,000 revenue, $10,000 direct costs, 50 machine hours, 4 batch starts, 100 orders

Product 2: $46,000 revenue, $20,000 direct costs, 20 machine hours, 8 batch starts, 200 orders

Which of the following process improvements is the MOST profitable?

Reduce both products batch starts by 25%.

Reduce machine hour activity rate cost by 25%.

Reduce Product 1s direct costs by 12.5%.

Reduce Product 2s orders by 50%.