Question

Allen Mfg., Inc., is currently operating at only 90 percent of fixed asset capacity. Current sales are $560,000. How fast can sales grow before any new fixed assets are needed? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

Ans 11.11%

Full capacity = Current Sales / Current operating percent

                   = 560000 / 90%

                   = 6,22,222

Difference in Sales = (Sales at full capacity - Current sales) / Current capacity

                            = (6,22,222 - 560000) / 560000

                             = 11.11%