Quality Chairs Inc. (QC) manufactures chairs for industrial use. Laura Winters, the Vice President for Marketing at QC, concluded from market analysis that sales were dwindling for QC's standard three-foot chair due to aggressive pricing by competitors. QC's chairs sold for $550 whereas the competition's comparable chair was selling for $495. Winters determined that a price drop to $495 would be necessary to regain market share and reach a targeted annual sales level of 10,000 chairs.

Cost data based on sales of 10,000 chairs:

	Budgeted Quantity	Actual Quantity	Actual Cost
Direct Materials (Board Feet)	88,000	79,500	1,250,000
Direct Labor (HoursO	71,350	73,775	875,000
Machine hours (Hours	11,400	11,250	250,000
Finishing and Packing hours (Hours)	6,500	6,400	125,000

In order to reduce costs so as to reach the desired target cost, Quality Chairs should also focus on reducing the cost of:

A) Mechanical assembly

B) Machine Setups

C) Direct Labor

D) Direct Materials