Birch Company normally produces and sells $50,000$ unlts of RG$-6$ each month. The selling price is $$30$ per unlt, varlable costs

are $$10$ per unit, fixed manufacturing overhead costs total $$190,000$ per month, and fixed selling costs total $$36,000$ per

month.

Employment$-$contract strikes in the companles that purchase the bulk of the RG$-6$ unlts have caused Birch Company's sales to

temporarlly drop to only $10,000$ units per month. Birch Company estimates that the strlkes 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 strlke, which would reduce its fixed manufacturing overhead costs by $$42,000$ per month and

Its fixed selling costs by $10\%.$ Start$-$up costs at the end of the shutdown perlod would total $$13,000.$ Because BIrch Company

uses Lean Production methods, no Inventorles are on hand.

Required:

What is the financlal advantage $($dlsadvantage$)$ 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 perlod would Birch Company be Indifferent between closing the plant or

keeping It open?

Complete this question by entering your answers in the tabs below.

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

Financial $($disadvantage$)$