In the News: Funeral Giant Moves In on Small Rivals Life\'s two certanties are d
ID: 1238213 • Letter: I
Question
In the News: Funeral Giant Moves In on Small Rivals Life's two certanties are death and taxes. Some day, itcould be just as certain that Service Corp. International willhandle your funeral. The Houstan-based company will handle one in10 funeral services in the USA this year, or about 230,000. In just 32 years, the company has grown from a single funeral homeinto the world's biggest death-services provider with 2,631 funeralhomes, 250 cemeteries and 137 crematoria in North America, Europe,and Australia.... SCI's sheer size provides big advantagesover competitors. SCI is able to get cheaper price on casketsand other products from suppliers. Its funeral homesclustered in the same markets cut costs by sharing vehicles,personnel, services and supplies. That helps give SCI a profit of31 cents on every dollar it takes in for a typical funeral, vs. 12cents for the industry as a whole, SCI says. Funeraldirectors "don't want to think of (death) as big business," saysBetty Murrary of the National Foundation of Funeral Directors. "Butwe're in the era of acquisitions and consolidations." -Ron Trujillo(Source: USA Today) October 31, 1995) Question: Based on the News story listed above, what is the ATC perdollar of sales at a a) Large funeral home? b)Small funeral home? In the News: Funeral Giant Moves In on Small Rivals Life's two certanties are death and taxes. Some day, itcould be just as certain that Service Corp. International willhandle your funeral. The Houstan-based company will handle one in10 funeral services in the USA this year, or about 230,000. In just 32 years, the company has grown from a single funeral homeinto the world's biggest death-services provider with 2,631 funeralhomes, 250 cemeteries and 137 crematoria in North America, Europe,and Australia.... SCI's sheer size provides big advantagesover competitors. SCI is able to get cheaper price on casketsand other products from suppliers. Its funeral homesclustered in the same markets cut costs by sharing vehicles,personnel, services and supplies. That helps give SCI a profit of31 cents on every dollar it takes in for a typical funeral, vs. 12cents for the industry as a whole, SCI says. Funeraldirectors "don't want to think of (death) as big business," saysBetty Murrary of the National Foundation of Funeral Directors. "Butwe're in the era of acquisitions and consolidations." -Ron Trujillo(Source: USA Today) October 31, 1995) Question: Based on the News story listed above, what is the ATC perdollar of sales at a a) Large funeral home? b)Small funeral home?Explanation / Answer
Explanation:
(a) If a firm has a profit of $0.31 on every dollar, the rest of each dollar is average cost. Therefore, the average total costs are $0.69 for each dollar.
(b) If the industry has a profit of $0.12 on every dollar, the rest of each dollar is average cost. Therefore, the average total costs are $0.88 for each dollar.