KT Industries is operating at full capacity with a sales level of $989,400 and ﬁxed assets of $574,600. What is the required addition to ﬁxed assets if sales are to increase by 14%?

Question

Quizplus · Accepted Answer

The required addition to fixed assets can be calculated using the formula: (increase in sales / current sales) x current fixed assets.

The increase in sales is 14%, which is equivalent to 0.14. The current sales level is $989,400 and the current fixed assets are $574,600.

Therefore, the required addition to fixed assets is:
(0.14 x $989,400) / $574,600 = $241,069 / $574,600 = $0.4198

Rounding up to the nearest dollar gives $80,444, which is answer choice C.

KT Industries Is Operating at Full Capacity with a Sales