Last year Wei Guan Inc.had $350 million of sales,and it had $270 million of fixed assets that were used at 65% of capacity.In millions,by how much could Wei Guan's sales increase before it is required to increase its fixed assets?

Question

Quizplus · Accepted Answer

Wei Guan Inc. was operating at 65% capacity, so to find the full capacity sales, divide the current sales by the percentage of capacity used: $350 million / 0.65 = $538.46 million. The difference between full capacity sales and current sales gives the increase possible without new fixed assets: $538.46 million - $350 million = $188.46 million, which rounds to $188.5 million.

Last Year Wei Guan Inc