If we assume for forecasting purposes that the firm's fixed assets will increase directly with sales, we are effectively assuming that the firm:

Question

Quizplus · Accepted Answer

Assuming that a firm's fixed assets will increase directly with sales implies that the firm is operating at full capacity with its fixed assets, meaning there is no unused capacity. This is because if there were unused capacity, sales could increase without a corresponding increase in fixed assets.

If We Assume for Forecasting Purposes That the Firm's Fixed