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Building Supplies is considering a merger with Tools and More. Building's total operating costs of producing services are $4 million for a sales volume of
Building Supplies is considering a merger with Tools and More. Building's total operating costs of producing services are $4 million for a sales volume of $20 million. Tools' total operating costs of producing services are $1 million for a sales volume of $5 million. Suppose that synergies in the production process result in a cost of production for the merged firms totalling $4.8 million with total sales remaining unchanged. Calculate the total average cost for the merged firm.
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- 9.6 percent
- 40.0 percent
- 19.2 percent
- 20.0 percent
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