BarGraphs Corp

Multiple Choice

BarGraphs Corp. had capacity to produce 4000 units of L3 using 40,000 kg of direct materials. BarGraphs produced 3850 units of L3 by processing 35,500 kg of direct materials. Conversion cost per unit is $7.00. BarGraphs can add or reduce manufacturing capacity in increments of 4500 kgs.
What would be the cost savings if BarGraphs decides to reduce manufacturing capacity by 4500 kgs?

A) $3150
B) $700
C) $1050
D) $4500