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	$500,000	$750,000
Costs as percentage of sales:
Direct materials	20%	17%
Direct labor	8%	7%
Manufacturing Support costs	12%	6%
Workminusinminusprocess inventory	$100,000	$80,000

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

As a result of switching to a cellular manufacturing operation, total benefits are projected to increase annually by:

A.

$227,200.

B.

$222,800.

C.

$277,200.

D.

$272,800.