Which of the Following Is an Example of a Merger

question 63

Multiple Choice

Which of the following is an example of a merger undertaken in order to achieve gains from vertical integration?

• A)A car manufacturer acquires a car parts supplier.
• B)A breakfast cereal producer acquires another breakfast cereal producer and the combined firm is able to negotiate a reduced cost for the grain used in its cereal.
• C)A telecommunications firm acquires another telecommunications firm and the combined firm serves a large percentage of the market.
• D)An accounting firm acquires another accounting firm and the combined firm is able to eliminate duplication among administrative positions.
• E)A video game development firm acquires another video game development firm that specializes in designing games for a new gaming system.

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Definitions:

Activity Rates

Costs assigned to cost objects based on their use of activities, commonly used in activity-based costing.

Cost Pools

Aggregations of individual costs, often by department or service center, from which cost allocations are made.

Activity-Based Costing

An accounting method that identifies the activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

Activity-Based Costing

A pricing strategy that pinpoints various tasks within a company and allocates the expense of each task across all goods and services based on their real usage.