year National Aeronautics had a FA/Sales ratio of 40%, comprised of $250 million of sales and $100 million of fixed assets However, its fixed assets were used at only 75% of capacity 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?
A) 28.5%
B) 30.0%
C) 31.5%
D) 33.1%
E) 34.7%

Question

Quizplus · Accepted Answer

To find the target FA/Sales ratio at full capacity, first calculate the sales at full capacity: $250 million / 0.75 = $333.33 million. The fixed assets remain $100 million. The target FA/Sales ratio is then $100 million / $333.33 million = 30%.

Year National Aeronautics Had a FA/Sales Ratio of 40%, Comprised