Plant Shutdown or Continue Operations, Qualitative Considerations, Traditional Analysis KarlAuto Corporation manufactures automobiles, vans, and trucks. Among the various KarlAuto plants around the United States is the Bloomington plant, where vinyl covers and upholstery fabric are sewn. These are used to cover interior seating and other surfaces of KarlAuto products Pam Teegin is the plant manager for the Bloomington cover plant-the first KarlAuto plant in the region. As other area plants were opened, Teegin, in recognition of her management ability was given the responsibility to manage them. Teegin functions as a regional manager, although the budget for her and her staff is charged to the Bloomington plant. Teegin has just received a report indicating that KarlAuto could purchase the entire annual output of the Bloomington cover plant from outside suppliers for $32 million. Teegin was astonished at the low outside price, because the budget for the Bloomington plant's operating costs was set at $56.45 million. Teegin believes that the Bloomington plant will have to close down operations in order to realize the $24.45 million in annual cost savings. The budget (in thousands) for the Bloomington plant's operating costs for the coming year follows: Materials Labor: $12,000 Direct Supervision Indirect plant $13,800 3,750 4,300 21,850 Overhead Depreciation-equipment Depreciation-building Pension expense Plant manager and staff Corporate allocation $5,000 3,000 5,600 3,000 6,000 22,600 Total budgeted costs $56,450 Additional facts regarding the plant's operations are as follows: Due to the Bloomington plant's commitment to use high-quality fabrics in all of its products, the Purchasing Department was instructed to place blanket orders with major suppliers to ensure the receipt of sufficient materials for the coming year. If these orders are canceled as a consequence of the plant closing, termination charges would amount to 18 percent of the cost of direct materials