Major Manuscripts, Inc 2012 Income Statement 8,900 7,800 340 760 Net sales Cost

Question

Major Manuscripts, Inc 2012 Income Statement 8,900 7,800 340 760 Net sales Cost of goods sold Depreclation Earnings before interest and taxes Interest paid Taxable Income Taxes Net income 705 295 410 200 Dividends Major Manuscripts, Inc 012 Balance Sheet 2012 2012 2,450 990 2.950 6,390 3,330 9,720 2,740 240 $2,500 4,240 Cash Accounts payable Long-term debt Common stock Retained earnings Inventory Total Net fixed assets Total assets Total liabilities & equity9,720 Assume that Major Manuscripts, Inc., is currently operating at 80 percent of capacity and that sales are projected to increase to $11,500. What is the projected addition to fixed assets? O $328 O $112 $375 O $215 O $487

Explanation / Answer

Solution

Answer is $112

As Major manuscript is currenlty operating at 80% of the capacity we will first calculate the full capacity sales by the below formula.

Full capacity sales = Old Sales / % of capacity

   = 8900/.80

   = 11125

Here projected sales is 11500 which is greater than full capacity sales, therefore

Projected fixed assests : (Old fixed Assests / Full capacity sales ) * Projected sales

: (3330/11125 ) *11500

   : $3442

Projected addition to Fixed Assests will be : Projected fixed assests - Current fixed assests

: $3442 - $3330

   :$112

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

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