Final answer:
Revenue for a manufacturing company is typically recognized at the point of sale, which is when the ownership and control of goods are transferred to the buyer. Profits are calculated by comparing total revenue with total cost, and the shutdown point guides decisions on production continuity in the short term.
Step-by-step explanation:
For a typical manufacturing company, the most common critical point for recognizing revenue is the date when the ownership and control of goods are transferred to the buyer. This moment is often referred to as the point of sale. Transitioning to the specifics provided, to calculate profits, one must compare total revenue and total cost. A firm should continue producing in the short run if the price at which it sells its product is greater than the average variable cost, even if it is not covering the average total cost. This scenario helps in determining whether the firm should shut down immediately or continue to operate in the short term, which is explained by the shutdown point. The firm's shutdown point is the level of output and price at which the firm just covers its variable costs.