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:

-As a result of the layout reorganization,incremental manufacturing costs are projected to:
A)decrease by $22,800 annually.
B)decrease by $25,000 annually.
C)increase by $25,000 annually.
D)increase by $40,000 annually.

Question

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:
 
-As a result of the layout reorganization,incremental manufacturing costs are projected to:
A)decrease by $22,800 annually. 
B)decrease by $25,000 annually. 
C)increase by $25,000 annually. 
D)increase by $40,000 annually.

Quizplus · Accepted Answer

C)(Before: $500,000 × 40%)less (After: $750,000 × 30%)equals additional costs of $25,000.