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 the layout reorganization, reduced levels of

workminusinminusprocess

inventory are projected to decrease inventory carrying costs annually by:

A.

$11,000.

B.

$ 8,800.

C.

$ 7,500.

D.

$ 2,200.