Calculation of Average Costs with Economies of Scope Dee's Dry

question 40

Multiple Choice

Calculation of Average Costs with Economies of Scope Dee's Dry Cleaning is considering a merger with Larry's Laundry Supply Stores.Dee's total operating costs of producing services are $600,000 for sales volume of $4 million.Larry's total operating costs of producing services are $200,000 for a sales volume (J_P) of $1 million.Calculate the average cost of production for the Dee's and Larry's firms,respectively.

• A)15 percent, 20 percent
• B)20 percent, 15 percent
• C)16 percent, 16 percent
• D)60 percent, 5 percent

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Definitions:

Financial Reports

Documents that present an organization's financial performance and position, typically including balance sheets, income statements, and cash flow statements.

Compliance

Refers to the act of following and adhering to rules, regulations, standards, or laws.

Voucher

Any document that serves as proof of authority to pay cash or issue an electronic funds transfer, but for many businesses is a special form used to record data about a liability and the details of its payment.

Cash Payment

A financial transaction involving the outflow of cash from one party to another as a form of payment.