Question

The Besnier Company had $250 million of sales last year, 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?

Answer 1

The Besnier Company, which had $250 million in sales at 80% capacity utilization, could have achieved sales of $312.5 million had it operated at full capacity.

Step-by-step explanation:

The student's question is about capacity utilization and its impact on potential sales. The company's current sales are $250 million with the assets being operated at 80% capacity. To find out how large the sales could have been at full capacity, we apply a simple proportion calculation. Assuming that the capacity utilization is directly proportional to the sales, we calculate:

Full Capacity Sales = Current Sales / Current Capacity Utilization

Thus

Full Capacity Sales = $250 million / 0.80

= $312.5 million.

This means that, at full capacity, the Besnier Company could have generated sales of $312.5 million.

Answer 2

$312.5 million

Step-by-step explanation:

Given that,

Besnier Company's sales last year = $250 million

Fixed assets last year = $75 million

Previous operating capacity of fixed assets = 80%

Sales at full capacity:

= Previous sales ÷ Previous Capacity

= $250 million ÷ 80%

= $312.5 million

Therefore, if the company had operated at full capacity then the sales could have been $312.5 million.