Which of the following represent potential gains from an acquisition?
I. the replacement of ineffective managers
II. lower costs per unit produced
III. an increase in production size so that diseconomies of scale are realized
IV. spreading of overhead costs
A) II and III only
B) I and IV only
C) I, II, and IV only
D) I, III, and IV only
E) I, II, III, and IV

Question

Quizplus · Accepted Answer

I. the replacement of ineffective managers: This can lead to improved efficiency, better decision-making, and ultimately, increased profits.
II. lower costs per unit produced: This can be achieved through economies of scale, combined purchasing power, and streamlined production processes.
IV. spreading of overhead costs: When two companies merge, they can combine administrative, marketing, and other overhead costs, resulting in significant savings. However, choice III is not a potential gain as it refers to "diseconomies of scale" which means that production costs increase due to higher output.

Which of the Following Represent Potential Gains from an Acquisition