Last year Godinho Corp.had $250 million of sales,and it had $75 million of fixed assets that were being operated at 80% of capacity.In millions,how large could sales have been if the company had operated at full capacity?

Question

Quizplus · Accepted Answer

Since Godinho Corp. was operating at 80% capacity to achieve $250 million in sales, operating at 100% capacity would increase sales by 25% (since 80% to 100% is a 25% increase in capacity). Therefore, $250 million * 1.25 = $312.5 million.

Last Year Godinho Corp