Excess capacity Edney Manufacturing Company has $3 billion in sales and $0.7 bil

Question

Excess capacity Edney Manufacturing Company has $3 billion in sales and $0.7 billion in fixed assets. Currently, the company's fixed assets are operating at 85% of capacity. What level of sales could Edney have obtained if it had been operating at full capacity? Enter your answer in millions. For example, an answer of $5 billion should be entered as 5,000. Round your answer to two decimal places. $ million What is Edney's Target fixed assets/Sales ratio? Round your answer to two decimal places. % If Edney's sales increase 40%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio? Write out your answer completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest cent.

Explanation / Answer

85% capacity 100% capacity sales 3000 3529.41 fixed assets 700 823.53 a required level of sales 3529.41 b target asset/sales ratio 0.233333333 c required increase in assest sales = (3000*1.4) 4200 required asset 980 (4200*0.233) required increase (980-700)/700 40%

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