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 higher sales prices.

B.

of the ability to process larger batch sizes.

C.

of shorter delivery lead times.

D.

All of the above are correct.

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 higher sales prices.

B.

of the ability to process larger batch sizes.

C.

of shorter delivery lead times.

D.

All of the above are correct.