Georges Dry Cleaning is considering a merger with Weezzies Laundry Supply Stores. Georges total operating costs of producing services are $670,000 for sales volume (S_G) of $5.7 million. Weezzies total operating costs of producing services are $240,000 for a sales volume (S_W) of $2 million.

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

2. For a sales volume of $7.7 million, calculate the reduction in production costs the merged firms need to experience such that the total average cost (AC_{GeorgeWeezzie}) for the merged firms is equal to 11 percent.