Peter's TV Supplies Is Considering a Merger with Jan's Radio

Peter's TV Supplies is considering a merger with Jan's Radio Supply Stores. Peter's total operating costs of producing services are $330,000 for a sales volume (S_P) of $4.5 million. Jan's total operating costs of producing services are $30,000 for a sales volume (S_J) of $550,000. Suppose that synergies in the production process result in a cost of production for the merged firms totaling $360,000 for a sales volume of $5,050,000. Calculate the total average cost (TAC) for the merged firm.

A) 7.61%
B) 7.43%
C) 7.13%
D) 7.52%