Finance Lab Question 4

Business & Finance
Tutor: None Selected Time limit: 1 Day

Dec 8th, 2014

a. Average cost of production for two firms:

      Peter's firm  average cost in %= $ 330,000/$5,300,000 *100

                                                       = 6.23 % approximately

     Jan's firm average cost in % = $58,000/$630,000 * 100

                                                    = 9.21 % approximately

b. After merger of two firms,

     Total operating costs of two firms=$330,00 + $58,000

                                                           =$388,000

     Total sales volume of two firms=$5,300,000 + $630,000

                                                        =$5,930,000

     Total average cost = $388,000/$5,930,000 *100

                                     = 6.54%  approximately

c. Total cost of production of two firms=$350,000

    Total sales volume of two firms=$5,930,000

    Total average cost=$350,000/$5,930,000 *100

                                  = 5.90%   approximately

     

Dec 8th, 2014

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