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

question 30

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 $790,000 for sales volume (S_G) of $4.7 million. Weezzie's total operating costs of producing services are $202,000 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 12%.

• A) $840,000
• B) $710,000
• C) $175,000
• D) $152,000

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Definitions:

Personal Characteristics

The distinct attributes or traits that define an individual's personality and behavior.

Managerial Prerogatives

The rights and discretion granted to managers to make decisions and act in the best interest of the organization within the bounds of their authority.

Unions Declined

A trend observed in some countries or industries where the influence, membership, or power of labor unions decreases over time.

Efficiency Wages

Wages set above the market level to increase worker productivity and reduce turnover.