George's Dry Cleaning Is Considering a Merger with Weezzie's Laundry

question 49

Multiple Choice

George's Dry Cleaning is considering a merger with Weezzie's Laundry Supply Stores.George's total operating costs of producing services are $590,000 for sales volume (S_G) of $4.7 million.Weezzie's total operating costs of producing services are $152,000 for a sales volume (S_W) of $2.3 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 9 percent.

• A)$97,000
• B)$101,000
• C)$112,000
• D)$128,000

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Definitions:

Total Credits

The sum of all credit entries recorded in the accounting books of a business, reflecting the total value of transactions decreasing assets or increasing liabilities and equity.

Beginning Balance

The sum of funds in an account at the beginning of a new accounting cycle, transferred from the conclusion of the last period.

Chronological Record

A method of recording events or transactions in the order of their occurrence in time.

Debits and Credits

Accounting entries that either increase or decrease accounts on a company's balance sheet and income statement.