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Seifert Company is considering reorganizing its plant into manufacturing cells to improve efficiency. The following estimates have been prepared to evaluate the benefits of the reorganization: Before the After the reorganization reorganization Total annual $250,000 $375,000 sales Costs as a percentage of sales Direct 20% 1796 materials Direct labor 8% 7% 12% 6% Manufacturing overhead Work in process $50,000 $40,000 inventory Inventory carrying costs are estimated to be 11% per year. As a result of switching to cellular manufacturing, total benefits are projected to increase annually by