An insurance firm processes claims through its two facilities: facility A and facility B. Each month, facility A handles 8,000 claims and incurs in $37,000 fixed costs and $96,000 in variable costs. Each month, facility B handles 6,000 and incurs $28,000 in fixed costs and $48,000 in variable costs.

Hint: Be careful not to commit the sunk-cost fallacy in your analysis

Anticipate a moderate decrease in the number of claims, The firm should lay off workers in facility in order to decrease costs.

Facility B or Facility A?