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Birch Company normally produces and sells 41,000 units of RG-6 eact month. The selling price is $20 per unit, and variable costs are $0 per

Birch Company normally produces and sells 41,000 units of RG-6 eact month. The selling price is $20 per unit, and variable costs are $0 per unit, fixed manufacturing overhead costs total $200,000 per month, and fixed seling costs total $38,000 per month. Employment-contract strikes in the companies that purchase the bulk of the RG-6 units have caused Birch Campany sales to temporary drop to only 10,000 units per mimnum Elich Company estimates that the strikes will last for two months, after which time sales of RG-6 should return to nomal Due to the curent low level of sales, Birch Company thinking about closing down its own plant during the strike. which would reduce its fixed marufacturing overread costs by $42,000 per month and its fixed selling costs by 10%. Start-up costs at the end of the shutdown period would total $15,000. Because Birch Company uses Lean Production methods, no inventories are on hand. Required: 1 What is the financial advantage (dicadvantage) 1. Birch closes its own plant for two morths? 2. Should Birch close the plant for two months? 3. At what level of unit sales for the two-month period would Birch Company be Indifterent between closing the plant or keeping it open

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