Waisupport Corporanon manufactures seats for automoones, vans, trucks, ana vanous recreational venicies ine company nasa number of plants around the world, including the Denver Cover Plant, which makes seat covers Led Wosilo is the plant manager of the Denver Cover Plant but who serves as the regional production manager for the company His budget as the regional manager is charged to the Denver Cover Plant Vasilo has just heard that QualSupport has received a bid from an outside vendor to supply the equivalent of the entire annual output of the Denver Cover Plant for 52139 million Vosilo was astonished at the low outside bid because the budget for the Denver Cover Plant's operating costs for the upcoming year was set at $2469 million. If this bid is accepted the Denver Cover Plant will be closed down The budget for Denver Cover's operating costs for the coming year is presented below. Dance Cover Annual for ting costs 3 1.400.000 Labor Direct 36,900,000 Supervision 40.000 Indirect plant 9.330,000 Depreciation-pet 1.100.000 Depreciation building 2.600.000 plant and staff Corporate expenses Total budgeted conte $2,600,000 Derudi 1.300.000 560.00 Fored corporate expenses allocated to plants and other operating units based on total budgeted wage and laty costs Additional facts regarding the plant's operations are as follows Due to Denver Cover's commitment to use high-quality fabrics in all of its products, the Purchasing Department was instructed to piace blanket purchase 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 30% of the cost of direct materials b. Approximately 320 plant employees will lose the jobs if the plant is closed This includes all of the direct laborers and supervisors as well as the plumbers, electricians, and other skilled workers classified as indirect plant workers. Some would be able to find new jobs while many others would have difficulty. All employees would have difficulty matching Denver Covers base pay of $12.20 per hout, which is the highest in the area. A clause in Denver Cover's contract with the union may help some employees the company must provide employment assistance to its former employees for 12 months after a plant closing. The estimated cost to administer this service would be 50.83 million for the year Some employees would probably choose early retirement because Qual Support has an excellent pension plan. In fact 5075 milion of the annual pension expense would continue whether Denver Cover is open or not d. Vasilo and his staff would not be affected by the closing of Denver Cover. They would still be responsible for administering three Othet are parts the Denver Cover Plant were closed the company would realize about $222 million salvage value for the equipment and building of the plant remains open, there is no plans to make any significant investments in new equipment or building. The old moment is adequate and should last indefinitely 4 Qutud and shouldlastingentely Required: 2. QualSupport Corporation plans to prepare a financial analysis that will be used in deciding whether or not to close the Denver Cover Plant Management has asked you to identify 2. The annual budgeted costs that are relevant to the decision regarding closing the plant The annual budgeted costs that are not relevant to the decision regarding closing the plant c. Ar nonrecurring costs that would arise due to the closing of the plant. 3. Looking at the data you have prepared in (2) above a. Calculate the financial advantage (disadvantage) of closing the plant b. Should the plant be closed? complete this question by entering your answers in the tabs below