A firm currently has sales of $1.32 million and $964,500 in fixed assets. Currently operations are at 84% of capacity. By how much can sales increase without requiring the firm to purchase any additional fixed assets?(Enter values in dollars)

Question

Quizplus · Accepted Answer

To find out by how much sales can increase without requiring additional fixed assets, we first need to calculate the full capacity sales level. The firm is currently operating at 84% capacity, so we divide the current sales by 0.84 to find the full capacity sales: $1.32 million / 0.84 = $1.57142857 million. To find the increase in sales without requiring more fixed assets, we subtract the current sales from the full capacity sales: $1.57142857 million - $1.32 million = $251,428.57, which rounds to $251,429.

A Firm Currently Has Sales of $1