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:

Organisational Growth

The process by which an organization increases in size, resources, capabilities, or market share over time.

Core Competencies

Fundamental strengths and abilities of a company that give it a competitive advantage.

Organisational Strength

The capabilities and resources that give an organization a competitive edge or superior performance ability.

SWOT Analysis

A strategic planning tool used to identify Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning.