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:

Aspirin

A medication used to reduce pain, fever, inflammation, and, at lower doses, to prevent blood clots.

Theophylline Toxicity

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The chemical alteration of substances within the body, such as the breakdown of medications by the liver into forms that can be eliminated.

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A medical condition where the kidneys are unable to function adequately, resulting in the accumulation of waste products and fluids in the body.