Jan's Bakery Is Considering a Merger with Tina's Cookies

question 27

Multiple Choice

Jan's Bakery is considering a merger with Tina's Cookies. Jan's total operating costs of producing services are $300,000 for a sales volume of $2 million. Tina's total operating costs of producing services are $75,000 for a sales volume of $600,000. If the two firms merge, calculate the total average cost for the merged firm assuming no synergies.

• A) 12.5 percent
• B) 11.54 percent
• C) 14.42 percent
• D) 13.75 percent

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Definitions:

Reasonable Pay

Compensation for employment that is fair and commensurate with the job responsibilities, skill level required, and market rates.

Incompetence

A lack of ability, skill, or qualifications to perform a task or duty to a required standard.

Termination Of Employment

The end of an employee's duration with an employer, which can be voluntary or involuntary.

Notice

A formal communication or warning given in writing or verbally about something.