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Hodgkiss Mfg., Inc., is currently operating at only 91 percent of fixed asset capacity. Current sales are $ 715,000. How fast can sales grow before any new fixed assets are needed?

Respuesta :

Answer:

9.89%

Explanation:

For computing the maximum sales growth, first, we have to determine the full capacity sales which are shown below:

= Current sales ÷ Current operating fixed asset capacity

= $715,000 ÷ 91%

= $785,714.29

Now the maximum sales growth would be

= (Full capacity sales ÷ Current sales) - 1

= ($785,714.29 ÷ $715,000) - 1

= 9.89%

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