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Question: Acme Builders is considering merging with Joe's Construction to achieve economies of scope sufficient to drive the combined firm's costs down by at least $500,000. Acme Builders has costs of $5,000,000 on sales of $8,000,000, and Joe's Construction has costs of 3,000,000 and sales of $5,000,000. What would be the minimum combined average cost of sales expressed as a percentage necessary to achieve the cost reduction goal?

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