Calculation of Average Costs with Economies of Scope Blinds N

question 5

Multiple Choice

Calculation of Average Costs with Economies of Scope Blinds N Such is considering a merger with Window Supply Stores.Blinds' total operating costs of producing services are $750,000 for sales volume of $6 million.Window's total operating costs of producing services are $100,000 for a sales volume (J_P) of $1 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 percent.

• A)Decrease of $840,000
• B)Decrease of $10,000
• C)Decrease of $40,000
• D)Decrease of $90,000

Analyze cost structures to understand the impact of changes in fixed and variable costs on profit and break-even points.

Utilize tools such as 'goal seek' analysis in making financial decisions.

Understand the assumptions and limitations of cost-volume-profit analysis.

Understand the basic principles and applications of cost-volume-profit (CVP) analysis.

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