The Following Information Is Available on the Average Costs of the Three

question 40

Multiple Choice

The following information is available on the average costs of the three major banks in a given local market.Bank A has assets of $10 million and average costs are 15 percent, Bank B has assets of $20 million and average costs of 13 percent while Bank C has assets of $30 million with average costs of 12 percent.Average costs are measured as a proportion of total assets. By how much should operating costs of the combined entity (Bank A + Bank B) be reduced in order to stay competitive in the local market, ceteris paribus?

• A)$900,000.
• B)$600,000.
• C)$500,000.
• D)$400,000.
• E)$300,000.

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Definitions:

Materials Cost

The cost of raw materials and components used to create a product.

Ending Work

Typically refers to the working process or inventory that is still in progress at the end of an accounting period.

Production Cost Report

A detailed document outlining the costs associated with the production of goods, including materials, labor, and overhead.

Ending Work In Process

The value of all unfinished goods held by a company at the end of an accounting period.