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Question 23 Reilly 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 $1,200,000 $1,600,000 Costs as percentage of sales: Direct materials 23% 20% Direct labor 9% 7% Manufacturing Support costs 18% 13% Work-in-process inventory $250,000 $180,000 Inventory carrying costs are estimated to be 10% per year. After the change, direct labor costs as a percentage of sales are projected to decrease because: Select one: a. less work-in-process inventory needs to be moved from location to location. b. fewer employees are needed to produce a product due to the new work design. c. less supervisors are needed to oversee operations. d. All of the options are correct

Question 23 Reilly 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 $1,200,000 $1,600,000 Costs as percentage of sales: Direct materials 23% 20% Direct labor 9% 7% Manufacturing Support costs 18% 13% Work-in-process inventory $250,000 $180,000 Inventory carrying costs are estimated to be 10% per year. After the change, direct labor costs as a percentage of sales are projected to decrease because: Select one: a. less work-in-process inventory needs to be moved from location to location. b. fewer employees are needed to produce a product due to the new work design. c. less supervisors are needed to oversee operations. d. All of the options are correct

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 23 Reilly 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 $1,200,000 $1,600,000 Costs as percentage of sales: Direct materials 23% 20% Direct labor 9% 7% Manufacturing Support costs 18% 13% Work-in-process inventory $250,000 $180,000 Inventory carrying costs are estimated to be 10% per year. After the change, direct labor costs as a percentage of sales are projected to decrease because: Select one: a. less work-in-process inventory needs to be moved from location to location. b. fewer employees are needed to produce a product due to the new work design. c. less supervisors are needed to oversee operations. d. All of the options are correct
Transcribed Image Text:Question 23 Reilly 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 $1,200,000 $1,600,000 Costs as percentage of sales: Direct materials 23% 20% Direct labor 9% 7% Manufacturing Support costs 18% 13% Work-in-process inventory $250,000 $180,000 Inventory carrying costs are estimated to be 10% per year. After the change, direct labor costs as a percentage of sales are projected to decrease because: Select one: a. less work-in-process inventory needs to be moved from location to location. b. fewer employees are needed to produce a product due to the new work design. c. less supervisors are needed to oversee operations. d. All of the options are correct
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