I. A paint manufacturing company manufactures 2,00,000 per annum medium-sized tins of Spray Lac Paints when working at normal capacity. It incurs the following costs of manufacturing per unit: Rs. Direct material 7.80 Direct labour 2.10 Variable overhead 2.50 Fixed overhead 4.00 Product cost (per unit) 16.40 Each unit (tin) of the product is sold for Rs. 21 with variable selling and administrative expenses of 60 paisa per tin. During the next quarter only 10,000 units can be produced and sold. Management plans to shut down the plant estimating that the fixed manufacturing cost can be reduced to Rs. 74,000 for the quarter. When the plant is operating the fixed overheads are incurred at a uniform rate throughout the year. Additional costs of plant shut-down for the quarter are estimated at Rs. 14,000. a. To express your opinion, along with the calculations, as to whether the plant should be shut down during the quarter, and b. To calculate the shutdown point for quarter in units of products (i.e., in terms of number of tins)