When Alps Ltd operates at normal capacity, it manufactures 2,00,000 units of product per year. The unit cost of manufacturing at normal capacity is as follows: During the next 3 months, only 10,000...

When Alps Ltd operates at normal capacity, it manufactures 2,00,000 units of product per year. The unit cost of manufacturing at normal capacity is as follows:

During the next 3 months, only 10,000 units can be purchased and sold. Management plans to shut down the plant, estimating that the fixed manufacturing overheads can be reduced to `74,000 for the quarter when the plant is not operating; the fixed overhead costs are incurred at a uniform rate throughout the year. Additional costs of plant shutdown for the 3 months are estimated at `14,000. You are required to answer:

(a) Should the plant be shut down for 3 months? Show computations.

(b) What is the shutdown point for the 3 months in units of product?