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

---

Definitions:

Inventory

A company's stock of the products available for sale to customers, as well as raw materials and work-in-progress that will eventually become finished goods.

Accounts Receivable

Funds that are due to a business from its clients for goods or services already provided but not yet compensated for.

Liquidity Crisis

A situation where an entity lacks the liquidity necessary to meet its short-term obligations, potentially leading to insolvency.