Calculate the projected fixed assets needed given the following information: current sales = $275,000; current sales capacity = 75%; current fixed assets = $40,000; projected future sales = $475,000.
A) $11,818
B) $51,818
C) $12,818
D) $52,818
E) $60,818

Question

Quizplus · Accepted Answer

To calculate the projected fixed assets needed, first determine the current full capacity sales: $275,000 / 0.75 = $366,667. Then, find the ratio of future sales to current full capacity sales: $475,000 / $366,667 = 1.295. This means the company needs to increase its capacity by 29.5% to meet future sales. Since the current fixed assets are $40,000, the projected fixed assets needed are $40,000 * 1.295 = $51,800 (rounded to the nearest whole number gives $51,818).

Calculate the Projected Fixed Assets Needed Given the Following Information