Crib World is considering a merger with Tots Supply Stores. Crib's total operating costs of producing services are $250,000 for sales volume of $1.25 million. Tots' total operating costs of producing services are $210,000 for a sales volume (JP) of $900,000. Calculate the average cost of production for the Crib and Tots firms, respectively.
A) 20 percent, 23.33 percent
B) 23.33 percent, 20 percent
C) 27.78 percent, 16.8 percent
D) 21.4 percent, 21.4 percent

Question

Quizplus · Accepted Answer

Crib's average cost of production = $250,000/$1,250,000 = 20%Tots' average cost of production = $210,000/$900,000 = 23.33%

Crib World Is Considering a Merger with Tots Supply Stores