Gerald's Manufacturing is operating at 78% of its fixed asset capacity and has current sales of $575,000. How fast can the firm grow before any new fixed assets are needed?
A) 22.00 %
B) 28.21 %
C) 31.16 %
D) 37.00 %
E) 44.00 %

Question

Quizplus · Accepted Answer

The firm can grow up to 100% of its fixed asset capacity from its current 78% capacity. The growth rate before needing new fixed assets is calculated as (100% - 78%) / 78% = 28.21%.

Gerald's Manufacturing Is Operating at 78% of Its Fixed Asset