Calculation of Average Costs with Economies of Scope Flowers Galore

question 103

Multiple Choice

Calculation of Average Costs with Economies of Scope Flowers Galore is considering a merger with Balloons N More.Flowers Galore's total operating costs of producing services are $400,000 for a sales volume of $4 million.Balloons' total operating costs of producing services are $30,000 for a sales volume of $700,000.If the two firms merge,calculate the total average cost for the merged firm assuming no synergies.

• A)4.29 percent
• B)9.15 percent
• C)10.00 percent
• D)7.14 percent

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Definitions:

Factor B

A variable or element in an experiment or model that is manipulated to determine its effect on outcomes, often used in factorial designs.

Interaction Effect

Occurs when the effect of one independent variable on the dependent variable differs depending on the levels or values of another independent variable.

F-Ratio

The ratio used in analysis of variance (ANOVA) to compare the variance between groups to the variance within groups.

Main Effect

The main effect is the impact of an independent variable on a dependent variable in a statistical model, ignoring other variables' influences.