Please help me to understand short-term decision – Shutdown decision

This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.

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August 5, 2021 at 6:14 am #630428
phungnguyen266
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Hello everyone,

Please help me with the illustration 3 page 207-208 (short-term decision)
I do not know why profits is booted from $4,000 to $9,000 in the solution paragraph.

Thank you?
August 5, 2021 at 7:42 am #630445
John Moffat
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It would help if you wrote which book you are referring to 🙂
August 5, 2021 at 12:32 pm #630479
phungnguyen266
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Hello Mr. John,

It is the textbook of BPP Learning Media.
This illustration is also mentioned in your video about Shutdown probblem.

Thank you for your help.
August 5, 2021 at 4:22 pm #630501
John Moffat
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I do not have the BPP Study Text – only the Revision Kit.

As far as the example in my lectures is concerned, the profit does not go from $4,000 to $9,000.

The profit currently is $5,000 (as per the question).

If they stop Rooks and do Crowners instead then the incremental (extra) profit resulting is $4,000 (for the reasons I explain in my lecture), and therefore the new profit will be $5,000 + $4,000 = $9,000.
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