A Canadian firm has net income of $10 on sales of $50,fixed assets of $75,and total assets of $125.The firm retains 50% of its earnings.If the firm is operating at 90% capacity,what are the full capacity sales?
A)$40
B)$56
C)$50
D)$72

Question

Quizplus · Accepted Answer

Full capacity sales = Net income / (Net income / Sales) * 100 / Capacity utilization= 10 / (10 / 50) * 100 / 90= 10 / 0.2 * 100 / 90= 50 * 100 / 90= 5000 / 90= $55.56

A Canadian Firm Has Net Income of $10 on Sales