Management of Alpanso Corporation uses Activity Based Management to help address some keys issues. Using the principle of root cause. the analysts came up with the core problems and took the following actions to improve the process and realize significant benefits for the comparry Through a more efficient process, there was a reduction in the need for 20 emplayees each being paid $60,000 in salary each. Employee benefits were 35% of the salaries. Of that number, 12 were laid-off with a s3000 separation package and the rest were assigned to other positions in the company. Cost of storage, insurance and property taxes on inventory were reduced by $112,000 due to the significant reduction in inventory levels. New Flexible Manufacturing Equipment that could produce the product faster (and therefore was a key factor in the head-count reduction) cost $50,000 and had a 10 year life. Because of the reduction in inventory of $600,000 down to $100,000, the firm had money freed up to invest at 5% return per year on that nvestment. Unused space in the old warehouse was converted for potential future manufacturing of new products. There is no identifiable opportunitles at this time. The rent on the warehouse i $30,000 per year The total dollar impact for the current year from the implementation of this study would be savings of

$1,543,000
$1,368,000
$1,068,000
$1,140,000
None of the above