Question content area top

Part $1$

Vander Belt$$ Manufacturing, Inc., is considering reorganizing its plant into manufacturing cells. The following estimates have been prepared to evaluate the benefits from the$$ reorganization:

Before the change

After the change

Total annual sales

$$$$250,000$

$$$$375,000$

Costs as percentage of$$ sales:

$$Direct materials

$20\%$

$17\%$

$$Direct labor

$8\%$

$7\%$

$$Manufacturing Support costs

$12\%$

$6\%$

Workinprocess inventory

$$ $$50,000$

$$ $ $40,000$

Inventory carrying costs are estimated to be$11\%$ per year.

After the$$ change, sales are projected to increase$$ because:

Question content area bottom

Part $1$

A$.$

of shorter delivery lead times.

B$.$

of the ability to process larger batch sizes.

C$.$

of higher sales prices.

D$.$

All of the above are correct.