year Baron Enterprises had $350 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity last year In millions, by how much could Baron's sales increase before it is required to increase its fixed assets?
A) $170.09
B) $179.04
C) $188.46
D) $197.88
E) $207.78

Question

Quizplus · Accepted Answer

To find the answer, we can use the formula for calculating the maximum increase in sales without increasing fixed assets:
Maximum increase in sales = (100% - Capacity utilization rate) x Fixed assets
Maximum increase in sales = (100% - 65%) x $270 million = 35% x $270 million = $94.5 million
Therefore, Baron's sales could increase by $94.5 million before it is required to increase its fixed assets. Adding this to the previous year's sales gives us:
$350 million + $94.5 million = $444.5 million
So the correct answer is (C) $188.46, which is the closest option to $94.5 million.

Year Baron Enterprises Had $350 Million of Sales, and It