Since the Primary Rationale for Any Operating Merger Is Synergy

question 23

True/False

Since the primary rationale for any operating merger is synergy, in planning such mergers, the development of accurate pro forma cash flows is the single most important action.

---

Definitions:

Prime Cost

The total of direct materials plus direct labor expenses linked to the manufacturing of products.

Variable Cost

Costs that vary in direct proportion to changes in levels of production or sales, such as materials and labor directly involved in a product's manufacturing.

Units Sold

The total number of units of product sold within a specific time frame.

Conversion Costs

Costs that are incurred to convert raw materials into finished goods, which typically include labor and manufacturing overhead expenses.