Hodgkiss Mfg., Inc., is currently operating at only 86 percent of fixed asset capacity.

Hodgkiss Mfg., Inc., is currently operating at only 86 percent of fixed asset capacity. Current sales are $620,000. 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.)

Maximum growth sales ?

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Expert Solution

Full-capacity sales = $620,000 / 0.86 = $720,930.23

Maximum growth sales = (Full-capacity sales - Current sales) / Current sales

Maximum growth sales = ($720,930.23 - $620,000) / $620,000

Maximum growth sales = 0.1628 or 16.28%

jeff jeffy answered 2 years ago

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