(Note: This type of decision is similar to dropping a product line.) Nicholas Company manutactures a fast-bonding glue, normaty producing and selling 52,000 litres of the glue each month. This of we, which is known as M.7,15 used in the wookf thidusity to manufacture piywood. The selling price of MJ.7 is $35 per litre, varlable costs are $21 per litte, food manafacturing ovectiead costs in the plant totaI $299,000 per month, and the fixed selling costs totai 5400,400 per month. Strikes in the mills that purchase the bulk of the M.7.7 glue have caused Nicholas. Companys sales to temporarly diop to only 13,000 litres per month. Nicholas Company's management estimates that the strikes will last for two montis, after wisch sales of My.7 should return to normal. Due to the current low level of sales. Nicholas Company's management is thinking about closing down the plant during the strike If Nicholas Company does close down the plant, foxed manufacturing overhead costi can be reduced by $78.000 per month and fued setting costs can be reduced by 10%. Start-yp costs at the end of the shutdown period worild tofal \$5s caso Since Nicholas Campany uses lean production methods, no imentories are on hand Requirect 1-o. Assuming that the strkes continue fot two months. compite the increase or decrease in inconje tiont dosing the piont. 1-b. Would you recommend that Nicholas Company close its own plant? 2. At what level of sales (in litres) for the two-month period thould Nicholos gomplany be indifferent between closing the plant and keepeng it open? (hint. This is a type of breakeven analyeis, excepe that the fined-onet pertion of your break-even computation should include only those fixed costs that are relevant (l.e. avoidablej over the two-month period)