VBM, 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

$50,000

$63,750

Direct labor

$20,000

$30,000

Manufacturing Support costs

$30,000

$22,500

Work-in-process inventory

$60,000

$ 40,000

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

As a result of the layout reorganization, incremental manufacturing costs are projected to:

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