a$.$ Due to Denver Clover's commitment to use high$-$quality fabrics in all of its products, the Purchasing Department was

instructed to place blanket purchase orders with major suppliers to ensure the receipt of sufficient materials for the coming

year. If these orders are canceled as a consequence of the plant closing, termination charges would amount to $20\%$ of the

cost of direct materials.

b$.$ Approximately $400$ plant employees will lose their jobs if the plant is closed. This includes all of the direct laborers and

supervisors as well as the plumbers, electricians, and other skilled workers classified as indirect plant workers. Some

would be able to find new jobs while many others would have difficulty. All employees would have difficulty matching

Denver Clover's base pay of $$18\mathrm{.}80$ per hour, which is the highest in the area. A clause in Denver Clover's contract with the

union may help some employees; the company must provide employment assistance to its former employees for $12$

months after a plant closing. The estimated cost to administer this service would be $$1\mathrm{.}5$ million for the year.

c$.$ Some employees would probably choose early retirement because QualComm has an excellent pension plan. In fact, $$3$

million of the annual pension expense would continue whether Denver Clover is open or not.

d$.$ Vosilo and his staff would not be affected by the closing of Denver Clover. They would still be responsible for administering

three other area plants.

e$.$ If the Denver Clover Plant were closed, the company would realize about $$3\mathrm{.}2$ million salvage value for the equipment and

building. If the plant remains open, there are no plans to make any significant investments in new equipment or buildings.

The old equipment is adequate and should last indefinitely.

Required:

QualComm Corporation plans to prepare a financial analysis that will be used in deciding whether or not to close the

Denver Clover Plant. Management has asked you to identify:

a$.$ The annual budgeted costs that are relevant to the decision regarding closing the plant.

b$.$ The annual budgeted costs that are not relevant to the decision regarding closing the plant.

c$.$ Any nonrecurring costs that would arise due to the closing of the plant.

Looking at the data you have prepared in $(2)$ above,

a$.$ Calculate the financial advantage $($disadvantage$)$ of closing the plant.

b$.$ Should the plant be closed?

Please include: A detailed explanation of every step, include all math steps used and explain your reasoning behind each step. For $2)$ all parts and $3)$ all parts use all the facts and include the answers to all parts with math and reasoning. Thank you!