Cindy's Computer Corp

question 29

Multiple Choice

Cindy's Computer Corp. is considering a merger with Bobby's Hard Drive, Inc. Cindy's total operating costs of producing services are $2.1 million for a sales volume (S_C) of $13 million. Bobby's total operating costs of producing services are $2.5 million for a sales volume (S_B) of $7 million. If the two firms merge, calculate the total average cost (TAC) for the merged firm assuming no synergies.

• A) 23%
• B) 17%
• C) 19%
• D) 21%

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Definitions:

Relative Fair Value

A method of allocating the total purchase price in a business combination to the acquired assets and liabilities based on their fair values.

Database Access

Database access pertains to the permission or capability to retrieve or manipulate data stored in a database.

Upfront Advice

Preliminary counsel or guidance provided, often involving a fee, before the client commits to a service or makes an investment.

AASB 2

Refers to the Australian Accounting Standards Board standard on Share-based Payment, which outlines the financial accounting and reporting of share-based payment transactions.