Because Jerry's Ice Cream is currently producing at less than full capacity, the pro forma for next year should project:

Question

Quizplus · Accepted Answer

Since Jerry's Ice Cream is producing at less than full capacity, it implies that the company can increase production without a proportional increase in fixed assets. Therefore, as sales grow, the need for additional fixed assets grows at a slower rate, since the company can utilize its existing capacity more fully.

Because Jerry's Ice Cream Is Currently Producing at Less Than