9. Last year Wei Guan Inc. had $380 million of sales, and it had $270 million...

Question

Question

Answer 1

Answer #1

The increase in sales is computed as shown below:

= $ 380 million / $ 270 million

= $ 1.4074 Approximately

It means 1 dollar in fixed asset contributes $ 1.4074 in sales

Increase in fixed assets if operate at full capacity

= $ 270 / 0.75 - $ 270

= $ 90 millions

So the increase in sales will be:

= $ 90 millions x $ 1.4074

= $ 126.67 million Approximately

Feel free to ask in case of any query relating to this question

Answer 2

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