Question

Last year Baron Enterprises had $350 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity last year. In millions, by how much could Baron's sales increase before it is required to increase its fixed assets? a. $170.09 b. $179.04 c. $197.88 d. $188.46 e. $207.78

Answer 1

Increase in sales= 188.46 million

Step-by-step explanation:

Giving the following information:

Sales= 350 million

Fixed assests= 270 million

Used capacity= 65%

We need to determine the increase in sales that would occupy the entire capacity.

If 350 is 65% then:

Full capacity= (100*350)/65= 538.46 million

Now, the increase in sales:

Increase in sales= 538.46 - 350= 188.46 million