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

If we assume that the firm's fixed assets will increase directly with sales, it means that the firm is assuming that it has no unused capacity in its fixed assets. This assumption is in line with the idea that the firm is operating at full capacity and needs to increase its fixed assets to accommodate any increase in sales.

If We Assume for Forecasting Purposes That the ﬁRm's ﬁXed