Silver King Inc.is currently running at 60 percent of full capacity.The plant and equipment are currently valued $125 million and Silver King generated sales of $90 million.What is the full capacity sales of Silver King with their current assets?
A) $208 million
B) $150 million
C) $125 million
D) $144 million
E) $100 million

Question

Quizplus · Accepted Answer

Since the plant is running at 60% of its full capacity, we can assume that the sales generated are also 60% of the full capacity sales. Therefore, using the following formula: 
Full Capacity Sales = (Actual sales/Percentage of capacity utilization) x 100 
we can calculate the full capacity sales of Silver King as: 
Full Capacity Sales = (90/0.60) x 100 = $150 million 
Hence, the correct answer is B.