George's Dry Cleaning Is Considering a Merger with Weezzie's Laundry

question 73

Multiple Choice

George's Dry Cleaning is considering a merger with Weezzie's Laundry Supply Stores. George's total operating costs of producing services are $590,000 for sales volume (SG) of $4.7 million. Weezzie's total operating costs of producing services are $152,000 for a sales volume (SW) of $2.3 million. For a sales volume of $7 million, calculate the reduction in production costs the merged firms need to experience such that the total average cost (TAC) for the merged firms is equal to 9 percent.

• A) $97,000
• B) $101,000
• C) $112,000
• D) $128,000

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Definitions:

N-Propanol

Also known as 1-propanol, a primary alcohol with the formula CH3CH2CH2OH, utilized as a solvent and in the synthesis of other chemicals.

Nucleophilic Acyl Substitution

A chemical reaction in which an acyl group on a molecule is replaced by a nucleophile, a process common in organic synthesis.

Carboxylic Acid

Organic compounds characterized by the presence of a carboxyl group (-COOH), with acidic properties, making them able to donate a hydrogen ion to solutions.

Butanenitrile

An organic molecule also known as butyronitrile, a nitrile derivative of butane.