Earleton Manufacturing Company has $2 billion in sales and $400,000,000 in fixed

Question

Earleton Manufacturing Company has $2 billion in sales and $400,000,000 in fixed assets. Currently, the company's fixed assets are operating at 85% of capacity.

What level of sales could Earleton have obtained if it had been operating at full capacity? Write out your answer completely. Round your answer to the nearest whole number.
$  

What is Earleton's target fixed assets/sales ratio? Round your answer to two decimal places.
%

If Earleton's sales increase 30%, 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. Do not round intermediate calculations. Round your answer to the nearest whole number.
$

Explanation / Answer

a) Level of sales if operated at 100% capacity = 2000000000/85% = $    2,35,29,41,176 b) Target fixed assets/sales ratio = 400000000/2352941176 = 17.00% c) Increase in fixed assets to meet target ratio = 2000000000*130%*17%-400000000 = $          4,20,00,000

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