Trans Globe Airlines Is in Talks with Royal Blue Airlines,a

question 172

Multiple Choice

Trans Globe Airlines is in talks with Royal Blue Airlines,a financially troubled rival.The firms believe the merger will create a stronger company that can offer travelers more flights to a wider variety of destinations.This proposed merger is an example of a:

• A)Conglomerate merger.
• B)Leveraged buyout.
• C)Horizontal merger.
• D)Joint venture.

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Definitions:

Variable Costing

An accounting method that charges all variable production costs directly to the cost of production, excluding fixed overhead costs from product costing.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as rent, salaries of managers, and depreciation of equipment.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overheads - in the cost of a unit of product.

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of goods sold and reports fixed overhead as an expense of the period.