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

question 4

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 (S_G) of $4.7 million. Weezzie's total operating costs of producing services are $152,000 for a sales volume (S_W) 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%.

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

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Definitions:

Null Hypothesis

A statement or hypothesis that suggests there is no significant difference or relationship between specified populations, any observed difference being due to sampling or experimental error.

Standard Deviation

A measure of how spread out numbers are in a dataset, indicating the variation or dispersion around the mean.

Programming Ability

The skill or competence in creating and understanding computer programs and software using different programming languages.

Null Hypothesis

The default assumption in statistical analysis that there is no significant difference or effect.