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%
Workminusinminusprocess inventory	$50,000	$ 40,000

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

A.

the decreased need for inventory storage.

B.

lower financing costs.

C.

reduced costs in materials handling.

D.

All of the above are correct.