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Evgen [1.6K]
3 years ago
8

North Construction had $850 million of sales last year, and it had $425 million of fixed assets that were used at only 90% of ca

pacity. What is the maximum sales growth rate North could achieve before it had to increase its fixed assets?
a. 11.11%
b. 16.81%
c. 13.96%
d. 5.41%
e. 8.26
Business
1 answer:
11Alexandr11 [23.1K]3 years ago
6 0

Answer:

a. 1.11%

Explanation:

The computation of the maximum sales growth rate is shown below:-

Sales 90% Capacity = $850,000,000

Sales at 100% Capacity = $850,000,000 ÷ 90% × 100%

= $944,444,444.4

Growth in Sales by using unused capacity = Sales at 100% Capacity - Sales 90% Capacity

=$944,444,444.4  -  $850,000,000

= $94,444,444.4

Growth rate =Growth in Sales by using unused capacity ÷ Sales last year

-94444444.4  ÷ $850,000,000

= 1.11%

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