Answer:
Maximum Sales Growth Rate = 66.67%
Explanation:
The question is to determine the maximum sales growth in percentage which North Construction could achieve before it had to increase its fixed assets
What is the sales at the 60% Capacity $850,000,000
Therefore, sales at 100% capacity
= (Sales at 60% Capacity x 100%) / 60%
= ($850,000,000 x 100) / 60
= $1, 416, 666, 666.67
Also, based on the figure what is the Growth in sales for unused capacity of 40%
= Sales at 100% - Sales at 60%
= $1, 416, 666, 666.67- $850,000,000
= $566, 666, 666.67
Finally, what is the growth rate of this unused capacity
= Sales @40% capacity / Sales @ 60% capacity x 100
= $566, 666, 666.67/ $850,000,000 x 100
= 66.67%
