Question: AAA Example. A garments factory is facing recession. Its sunk costs are Rs. 50 lakhs per annum while the out of pocket costs are Rs.

AAA Example. A garments factory is facing

AAA

Example. A garments factory is facing recession. Its sunk costs are Rs. 50 lakhs per annum while the out of pocket costs are Rs. 80 per unit. The factory has a capacity to produce 24,000 units per year. Due to recession the maximum expected sales for six months are 6,000 units at a selling price of Rs. 100 per unit. The recession is expected to last 6 months. Should the factory be shut down for this period ? ohut down the total loss will be Rs. 2.5 lakhs (half

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