university of southern california Operations And Supply Chain Management Assignment Help - Accounting

Question - Hallas Company manufactures a fast-bonding glue in its Northwest plant. The company normally
produces and sells 46,000 gallons of the glue each month. This glue, which is known as MJ-7, is used
in the wood industry to manufacture plywood. The selling price of MJ-7 is $35 per gallon, variable
costs are $20 per gallon, fixed manufacturing overhead costs in the plant total $226,000 per month,
and the fixed selling costs total $310,000 per month.
Strikes in the mills that purchase the bulk of the MJ-7 glue have caused Hallas Company%u2019s
sales to temporarily drop to only 11,000 gallons per month. Hallas Company%u2019s management
estimates that the strikes will last for two months, after which sales of MJ-7 should return to normal.
Due ...Read More to the current low level of sales, Hallas Company%u2019s management is thinking about closing
down the Northwest plant during the strike.
If Hallas Company does close down the Northwest plant, fixed manufacturing overhead costs can be
reduced by $60,000 per month and fixed selling costs can be reduced by 9%. Start-up costs at the
end of the shutdown period would total $16,000. Because Hallas Company uses Lean Production
methods, no inventories are on hand.

1a.
Assuming that the strikes continue for two months, what is the impact on income by
closing the plant.(Input the amount as a positive value. Omit the "$" sign in your
response.)


2.At what level of sales (in gallons) for the two-month period should Hallas
Company be indifferent between closing the plant or keeping it open? (Round
your answer to the nearest whole number.) ...Read Less

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