Ambrosia Corp Materials Usage Has a Rate of $6 Per Part and It

Ambrosia Corp. is a manufacturer of equipment used in manufacturing. It currently produces a product with 30 parts but through redesign has reduced the number of parts to 9. Then current activity capacity and demand for the 30 unit configuration and expected activity demand for the 9 part configuration are provided below: $\begin{array}{|l|l|l|l|l|}\hline{\text { Activities }} & \text { Activity } & \text { Activity } & \text { Current } & \text { Expected } \\& \text { Driver } & \text { Capacity } & \text { Activity Demand } & \text { Activity Demand } \\\hline \text { Materials } & \begin{array}{l}\text { pumber of } \\\text { uarts }\end{array} & 300,000 & 300,000 & 90,000 \\\hline \text { Assembly } & \begin{array}{l}\text { direct } \\\text { labor } \\\text { hours }\end{array} & 20,000 & 20,000 & 6,000 \\\hline \begin{array}{l}\text { Purchasing } \\\text { parts }\end{array} & \begin{array}{l}\text { orders of }\end{array} & 20,000 & 16,000 & 8,000 \\\hline\end{array}$
Materials usage has a rate of $6 per part and no fixed costs. Assembly has a rate of $20 per labor hour with no fixed component. Purchasing requires clerks that can process 5,000 purchase orders. Each clerk earns $40,000 per year. There is also a $1 per order processing cost.
What is the total cost reduction of the new design?

A) $2,208,000
B) $2,194,000
C) $1,628,000
D) $1,624,000