If there is a debate between a CEO and the president of a company as to whether or not to shut down a firm's plant in Texas that is currently losing $60,000 monthly and the president of the company says they should continue to operate, at least until a buyer is found for the production facility because that the Texas plant's fixed costs are $68,000 per month. However, the CEO says that fixed costs don't matter.
1. Should the Texas plant be closed or continue to operate at a loss in the short run?
2. How would you explain to the incorrect party that he is wrong?© BrainMass Inc. brainmass.com October 9, 2019, 5:06 pm ad1c9bdddf
1.Should the Texas plant be closed or continue to operate at a loss in the short run?
The Texas plant should continue to operate in the short run.
2. How would you ...
Short run losses are dissected.