The sales revenue for the year is estimated at Rs.9.00.000. The directors are seriously considering suspending...

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The sales revenue for the year is estimated at Rs.9.00.000. The directors are seriously considering suspending operations till the market picks up. Market research undertaken by the company reveals that in about 12 months time, the sales will pick up and the company can comfortably operate at 75% level of performance and earn a sales income of Rs.18,00,000 in that year. The sales personnel of the company do not want to suspend operations for fear of adverse reactions in the market but the directors want to decide the issue purely on financial considerations. If the manufacturing and other operations of the company are suspended for a year, it is estimated that, The present fixed cost could be reduced to Rs.2, 20, 000 per annum. The settlement cost of personnel not required would amount to Rs.1, 50, 000. The maintenance of plant has to go on and that would cost Rs.20, 000 per annum On resuming operations, the expenditure connected with reopening after shut down would amount to Rs.80, 000. Submit a report to the directors and indicate therein, based on purely financial considerations, whether it would be advisable to suspend the company's operations in the current year. The sales revenue for the year is estimated at Rs.9.00.000. The directors are seriously considering suspending operations till the market picks up. Market research undertaken by the company reveals that in about 12 months time, the sales will pick up and the company can comfortably operate at 75% level of performance and earn a sales income of Rs.18,00,000 in that year. The sales personnel of the company do not want to suspend operations for fear of adverse reactions in the market but the directors want to decide the issue purely on financial considerations. If the manufacturing and other operations of the company are suspended for a year, it is estimated that, The present fixed cost could be reduced to Rs.2, 20, 000 per annum. The settlement cost of personnel not required would amount to Rs.1, 50, 000. The maintenance of plant has to go on and that would cost Rs.20, 000 per annum On resuming operations, the expenditure connected with reopening after shut down would amount to Rs.80, 000. Submit a report to the directors and indicate therein, based on purely financial considerations, whether it would be advisable to suspend the company's operations in the current year.