Question

Earleton Manufacturing Company has $2 billion in sales and $600,000,000 in fixed assets. Currently, the company's fixed assets are operating at 80% of capacity. What level of sales could Earleton have obtained if it had been operating at full capacity? Write out your answer completely. Round your answer to the nearest whole number. $

Answer 1

Answer:

The correct answer is $2,500,000,000.

Explanation:

According to the scenario, the computation of the given data are as follows:

Operating capacity = 80%

Sales = $2 billion

Fixed assets = $600,000,000

So, we can calculate the level of sales by using following formula:

Level of sales = Sales ÷ operating capacity

= $2,000,000,000 ÷ 80%

= $2,500,000,000