year Handorf-Zhu Inc.had $850 million of sales, and it had $425 million of fixed assets that were used at only 60% of capacity.What is the maximum sales growth rate the company could achieve before it had to increase its fixed assets?
A)54.30%
B)57.16%
C)60.17%
D)63.33%
E)66.67%

Question

Quizplus · Accepted Answer

The current capacity utilization is 60%, meaning the fixed assets can support sales up to $850 million / 0.6 = $1,416.67 million. The maximum sales growth rate is (($1,416.67 million - $850 million) / $850 million) * 100% = 66.67%.

Year Handorf-Zhu Inc