Question

Last year Wei Guan Inc. had $625 million in sales, and it had $270 million in fixed assets that were used at 65% of capacity. In millions, by how much could Wei Guan's sales increase before it is required to increase its fixed assets?
a. $400.48
b. $289.42
c. $336.54
d. $316.35
e. $302.88

Answer 1

Answer:

c. $336.54 million

Explanation:

For computing the increase in sales, first we have to determine the full capacity of sales value which is shown below:

= Sales ÷ capacity percentage given

= $625 million ÷ 65%

= $961.54 million

So, the increase in sales would be

= Full capacity sales - given sales

= $961.54 million - $625 million

=  $336.54 million