Birch Company normally produces and sells $43,000$ units of RG$-6$ each

month. The selling price is $$20$ per unit, variable costs are $$10$ per unit,

fixed manufacturing overhead costs total $$180,000$ per month, and fixed

selling costs total $$42,000$ per month.

Employment$-$contract strikes in the companies that purchase the bulk of the RG$-6$

units have caused Birch Company's sales to temporarily drop to only $11,000$ units

per month. Birch Company estimates that the strikes will last for two months, after

which time sales of RG$-6$ should return to normal. Due to the current low level of

sales, Birch Company is thinking about closing down its own plant during the strike,

which would reduce its fixed manufacturing overhead costs by $$46,000$ per month

and its fixed selling costs by $10\%.$ Start$-$up costs at the end of the shutdown period

would total $$12,000.$ Because Birch Company uses Lean Production methods, no

inventories are on hand.

Required:

What is the financial advantage $($disadvantage$)$ if Birch closes its own plant for two

months?

Should Birch close the plant for two months?

At what level of unit sales for the two$-$month period would Birch Company be

indifferent between closing the plant or keeping it open?

What is the financial advantage $($disadvantage$)$ if Birch closes its own plant for two

months?

$3.$At what level of unit sales for the two$-$month period would Birch Company be

indifferent between closing the plant or keeping it open?

Unit sales required for Birch to be indifferent