Calculation of Average Costs with Economies of Scope Flowers Galore

Calculation of Average Costs with Economies of Scope Flowers Galore is considering a merger with Balloons N More.Flowers Galore's total operating costs of producing services are $400,000 for a sales volume of $4 million.Balloons' total operating costs of producing services are $30,000 for a sales volume of $700,000.If the two firms merge,calculate the total average cost for the merged firm assuming no synergies.

A) 4.29 percent
B) 9.15 percent
C) 10.00 percent
D) 7.14 percent