Dee's Dry Cleaning is considering a merger with Larry's Laundry Supply Stores. Dee's total operating costs of producing services are $600,000 for sales volume of $4 million. Larry's total operating costs of producing services are $200,000 for a sales volume (JP) of $1 million. Calculate the average cost of production for Dee's and Larry's firms, respectively.
A) 15 percent, 20 percent
B) 20 percent, 15 percent
C) 16 percent, 16 percent
D) 60 percent, 5 percent

Question

Quizplus · Accepted Answer

Dee's average cost of production = ($600,000 / $4,000,000) * 100 = 15%. Larry's average cost of production = ($200,000 / $1,000,000) * 100 = 20%.

Dee's Dry Cleaning Is Considering a Merger with Larry's Laundry