North Construction had $850 million of sales last year, and it had $425 million of fixed assets that were used at only 60% of capacity.What is the maximum sales growth rate North could achieve before it had to increase its fixed assets?

Question

Quizplus · Accepted Answer

North Construction was operating at 60% capacity, so it could increase its operations to 100% capacity without acquiring new fixed assets. The maximum sales growth rate before needing to increase fixed assets can be calculated as the difference between 100% capacity and the current 60% capacity, divided by the current 60% capacity, all multiplied by 100 to convert to a percentage. This gives us $\frac{100\% - 60\%}{60\%} \times 100 = \frac{40\%}{60\%} \times 100 = 66.67\%$.

North Construction Had $850 Million of Sales Last Year, and It