Problem 1 Jano Corporation produces wood glue used by furniture manufacturers. The company normally produces and sells 10,000 gallons of the glue each month. White glue is sold for P 280 per gallon, variable costs is P 168 per gallon, fixed factory overhead cost total P 460,000 per month and the fixed selling costs total P 620,000 per month. Labor strikes in the furniture manufacturers that buy the bulk of white glue have caused the monthly sales of Jano to temporarily decrease to only 15% of its normal monthly volume. Jano Corporation's management expects that the strikes will last for about two months, after which sales of white glue should return to normal. However, due to the dramatic drop in sales level, management is considering to close down its plant during the two month period that the strikes are on. If the company will temporarily shut down its operations, it is expected that the fixed factory overhead costs can be reduced to P 340,000 per month and that the fixed selling and administrative costs can be reduced by P 62,000 per month. Start-up costs at the end of the shutdown period would total P 56,000. Required: 1. Compute for the shutdown cost 2. Determine the shutdown point 3. At a sales level of only 30% of the normal volume, should the company continue operating or shutdown temporarily for the two months? Defend your