Cindys Computer Corp. is considering a merger with Bobbys Hard Drive, Inc. Cindys total operating costs of producing services are $5.1 million for a sales volume (S_C) of $42 million. Bobbys total operating costs of producing services are $4.2 million for a sales volume (S_B) of $21 million.

1. Calculate the average cost of production for the two firms. (Round your answers to 2 decimal places.)

Cindys Computer Corp. ____ %

Bobbys Hard Drive, inc. __________ %

2. If the two firms merge, calculate the total average cost (TAC) for the merged firm assuming no synergies. (Round your answer to 2 decimal places.)

Total Avg Cost ______ %

3. Suppose, instead, that synergies in the production process result in a cost of production for the merged firms totaling $8.7 million for a sales volume of $63 million. Calculate the total average cost (AC_CindyBobby) for the merged firm. (Round your answer to 2 decimal places.)

Total Avg Cost ______ %