Suppose a firm has net income of $100 and a profit margin equal to 14%. If the firm is working at 2/3 capacity, then full capacity sales are:

Name: Suppose a firm has net income of $100 and a profit margin equal to 14%. If the firm is working at 2/3 capacity, then full capacity sales are:
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Question

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To find full capacity sales, first calculate current sales using the profit margin: $100 net income / 0.14 = $714. Since the firm is operating at 2/3 capacity, full capacity sales are $714 / (2/3) = $1,071.

Suppose a Firm Has Net Income of $100 and a Profit