The Following Three FIs Dominate a Local Market and Their

question 135

Multiple Choice

The following three FIs dominate a local market and their total assets are given below.
$\begin{array}{lccc} \text {Institution }& \text { Asset Size}\\ \text {Bank A}&\$ 50 \text { million}\\ \text {Bank B}& \$ 60 \text { million}\\ \text {Bank C}&\$ 90 \text { million}\\\end{array}$
If Bank C agrees to be purchased by Banks A and B,what proportion of assets of Bank C should be taken by Banks A and B,respectively in order to have equal post-merger assets?

• A) 52 percent and 48 percent.
• B) 50 percent and 40 percent.
• C) 56 percent and 44 percent.
• D) 40 percent and 50 percent.

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Definitions:

Variable Costing

An approach to costing that accounts for just the variable costs of production, including direct materials, direct labor, and variable manufacturing overhead, in the calculation of product costs.

Product Unit Cost

The total cost associated with producing a single unit of a product, encompassing both direct materials and direct labor costs.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or products.

Variable Overhead

Costs that fluctuate with production volume, such as electricity for manufacturing equipment, excluding fixed costs.