Question

EXCESS CAPACITY Bariton Manufacturing Company has $a billion in sales and $700.000.000 in fixed sets Currently, the company's fived t re operating 80% of capacity Wher level of we could Earleton he stand if had been operating at full capacity? Write out your answer completely Round your newer to the nearest whole number 6. What is Earleton's target foued wanata/sales ratiot Round your answer to two decimal places c. Earlson's sales increase 40% how large of an increase in fredat wil the company need to meet target fored Round your answer to the nearest whole number /sales to write out your answer completely. Do not found intermede calculation

Answer 1

(Your image is too small and I am not able to see properly some numbers. I think capacity is 80% though it is getting smudged on enlarging. I have solved the below after taking 80% capacity).

(a): Sales at full capacity = $3 billion/0.80

= $3,750,000,000

(b): Target fixed assets/sales ratio

= 700,000,000/3,750,000,000

= 18.67%

(c ): Sales amount after increase = 3 billion * 1.40

= $4,200,000,000

Now target FA/sales ratio = 18.67% or 0.1867

Thus 0.1867 = FA/4,200,000,000

Or FA = 0.1867 * 4,200,000,000

= $784,000,000

Thus increase in FA = 784,000,000 – 700,000,000

= $84,000,000