Problem 10-20A Shutting Down or Continuing to Operate a Plant [LO2]

Hallas Company manufactures a fast-bonding glue in its Northwest plant. The company normally produces and sells 42,000 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 $31 per gallon, variable costs are $20 per gallon, fixed manufacturing overhead costs in the plant total $223,000 per month, and the fixed selling costs total $320,000 per month.

Strikes in the mills that purchase the bulk of the MJ-7 glue have caused Hallas Company