capacity 401 47. Last year Canada Corp. had $250 million of sales and $125 milli

Question

capacity 401 47. Last year Canada Corp. had $250 million of sales and $125 million of fixed assets, so its FA/Sales ratio was 50%. However, its fixed assets were used at only 65% ofcapacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target FA/Sales ratio should the company set? TagetEAPatto aFesscopua en Ratto a. 28.5% b. 50.0% c. 31.5% d. 33.1% Sale ztom FA (2tM st-b2z?2.so7 le. 62m NSWER: b

Explanation / Answer

The answer shall be none of the above, since sales at 100% capacity utilization shall be:

250*100/65 = 384.615 million

FA/Sales Ratio shall be = 125/384.615

= 32.50%

I believe there has been some mistake in the options given in the question.

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.