Calculation of Average Costs with Economies of Scope Blinds N

question 98

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.Calculate the average cost of production for the Blinds and Window firms,respectively.

• A)10 percent, 12.5 percent
• B)12.5 percent, 10 percent
• C)75 percent, 1.67 percent
• D)13.93 percent, 13.93 percent

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Definitions:

Payback Period

The time required for the return on an investment to repay the sum of the original investment.

Cash Inflows

The total amount of money being transferred into a business, usually from its operations, investments, or financing.

Capital Outlay

Expenditures for acquiring or upgrading physical assets such as equipment or property.

Average Rate of Return

A measure of the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.