At the recent board meeting, the president and CEO got into an argument about whether to shut down the firms plan in Johor Bahru. The Johor Bahru plant currently loses USD60,000 monthly. The president of the firm argued that the Johor Bahru plant should continue to operate, at least until a buyer is found for the production facility. The present argument was since the Johor Bahru plants fixed costs are USD68,000 per month. The CEO exploded over this point, castigating the president for considering fixed costs in making the shutdown decision. According to the CEO, Everyone knows fixed costs dont matter!.

1. Should the Terengganu plant be closed or continue to operate at a loss in the short-run period?
2. How would you explain the incorrect party that he/she is wrong?