Peters TV Supplies is considering a merger with Jans Radio Supply Stores. Peters total operating costs of producing services are $370,000 for a sales volume (S_P) of $5.7 million. Jans total operating costs of producing services are $62,000 for a sales volume (S_j) of $670,000.

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

Peter ______ %

Jan ______ %

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.)

3. Suppose, instead, that synergies in the production process result in a cost of production for the merged firms totaling $390,000 for a sales volume of $6,370,000. Calculate the total average cost (AC_PeterJan) for the merged firm. (Round your answer to 2 decimal places.)