Question

Synergies would LEAST likely cause:

a) an increase in fixed costs

b) an increase in sales

c) an increase in net working capital

d) an increase in variable costs

Answer 1

answer : d) an increase in variable costs

synergies are basically done for tax purpose of for bringing about efficiency in operations that reducing costs

Synergies may increase fixed costs to build up additional capacity, it may increase sales, as sales increases, an increase in net working capital is going to be there

so last option is least correct

so answer : d) an increase in variable costs

Generally as is said bring out reduction in costs so the increase in variable costs is least desirable as it also affects the contribution margin, which company will not like at all

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