Question

Earleton Manufacturing Company has $2 billion in sales and $500,000,000 in fixed assets. Currently, the company's fixed assets are operating at 75% of capacity. What level of sales could Earleton have obtained if it had been operating at full capacity

Answer 1

Answer:

Level of sales at full capacity =  $2,666,666,666.67  

Explanation:

75 % of fixed assets = 500,000,000

1% = 500,000,000/75

100% of fixed asset= 500,000,000/75 × 100 =  666,666,666.67  

Fixed assets at 100% capacity =  666,666,666.67  

If $500,000,000 worth of fixed asset = $ 2,000,000,000 sales

$1 fixed asset =  (2,000,000,000  / 500,000,000 ) sales

Then 666,666,666.67  fixed asset would produces

(2,000,000,000/ 500,000,000) ×  666,666,666.67=  2,666,666,666.67  sales

Level of sales at full capacity =  $2,666,666,666.67