The Pampanga Corporation manufactures a single product called "Mangyanan" Under normal operating conditions; the company manufactures and sells 90,000 units of this product in a 6 month period. The contribution to fixed costs and profits of each unit of product is P 8. The fixed overhead costs for six months amount to P 320,000.

Other companies buying this product are currently encountering labor difficulties and this resulted to a reduction in sales to only 4,000 units per month. A sales volume of only 4,000 units monthly will definitely result to a loss. Therefore, the management of the firm plans to close the plant for six months, anticipating that market will be back to normal after six months.

Studies indicated that the 6-month fixed overhead costs of P 320,000 can be cut down to P225,000 if the plant is closed. However, additional costs to protect the facilities and start up costs have been estimated at P 31,000.

Should the company close the plant for six months or continue its operation?