The Following Are Sensible Reasons for Mergers

question 33

Multiple Choice

The following are sensible reasons for mergers:
I.economies of scale;
II.economics of vertical integration;
III.complementary resources;
IV.prevent target firm from wasting surplus funds;
V.eliminate target firm inefficiencies;
VI.industry consolidation

• A)I only
• B)I, II, and III only
• C)I, III, IV, and V only
• D)I, II, III, IV, V, and VI

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Definitions:

High-Low Method

A technique used in managerial accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.

Contribution Margin Ratio

A calculation that shows a company's ability to cover its variable costs with its sales revenue, often expressed as a percentage.

Unit Variable Cost

The cost associated with producing additional units which may include materials, labor, and other variable costs.