Thorpe Mfg., Inc., is currently operating at only 87 percent of fixed asset capacity. Current sales...

Thorpe Mfg., Inc., is currently operating at only 87 percent of fixed asset capacity. Current sales are $660,000. How fast can sales grow before any new fixed assets are needed?

Maximum sales growth

%

Expert Solution

Full capacity sales = Current sales / Capacity

Full capacity sales = $660,000 / 0.87

Full capacity sales = $758,620.689

Maximum sales growth = (Full capacity sales / Current sales) - 1

Maximum sales growth = ($758,620.689 / $660,000) - 1

Maximum sales growth = 0.1494 or 14.94%

jeff jeffy answered 2 years ago

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