Calculation of Average Costs with Economies of Scope Baby Supplies

question 109

Multiple Choice

Calculation of Average Costs with Economies of Scope Baby Supplies is considering a merger with Tot Toy Stores.Baby's total operating costs of producing services are $450,000 for sales volume of $2.15 million.Tot's total operating costs of producing services are $250,000 for a sales volume (J_P) of $975,000.Calculate the average cost of production for the Baby and Tot Toy firms,respectively.

• A)11.63 percent, 20.93 percent
• B)20.93 percent, 25.64 percent
• C)46.15 percent, 11.63 percent
• D)22.4 percent, 22.4 percent

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Definitions:

Total Paid-In Capital

The total amount of capital that a company has received from shareholders in exchange for shares of stock.

Retained Earnings

The portion of net income that is retained by the corporation rather than distributed to its shareholders as dividends.

Total Stockholders' Equity

This represents the total amount of capital contributed by shareholders plus the retained earnings of a company, indicating the net worth of the company from a shareholder's perspective.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the market capitalization remains the same.