Plant Shutdown Decision Research Assignment Paper
At a recent board meeting, the president and CEO got into a heated argument about
whether to shut down the firm's plant in Jackson. The Jackson plant current loses $60,000 monthly. The president of the firm argued that the Jackson plant should continue to operate, at least until a buyer is found for the production facility. The president's argument was based on the fact that the Jackson plant's fixed costs are $68,000 per month. The CEO castigated the president for considering fixed costs in making the shutdown decision. According the CEO, “Everyone knows fixed costs don't matter!”
(a) Should the Jackson plant be closed or continue to operate at a loss in the short run?
(b) How would you explain to the incorrect party that he or she is wrong? Use Biblical principles in your answers.
Plant Shutdown Decision
Name
Institution
Date
(a) Should the Jackson plant be closed or continue to operate at a loss in the short run? (b) How would you explain to the incorrect party that he or she is wrong? Use Biblical principles in your answers. Continue or discontinue operations at Jackson plant
Profit (losses) is the difference between sales and costs incurred, then for the purpose of decision makin...