5.

a. Some nonvariable costs will continue to be incurred despite the temporary closing of the mine. Management is probably reluctant to discharge key employees since these employees will seek employment elsewhere and replacing them could be quite costly. A skeleton staff would need to be maintained for certain administrative and maintenance functions. Taxes and insurance would continue to be paid during the shut down period. b. Suspension of operations would be desirable when sales volume drops below 6,000 tons as shown below: Sales volume necessary to recover $6,000 of fixed costs: $6,000 ÷ $1.00 = 6,000 tons