Last year Baron Enterprises had $875 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity last year

Finance Aug 13, 2020

Last year Baron Enterprises had $875 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity last year. In millions, by how much could Baron's sales increase before it is required to increase its fixed assets?

Expert Solution

Computation of the sales increase before it is required to increase its fixed assets:-

Sales at 100% capacity = Current sales / Operating capacity

= $875 / 65%

= $1,346.15 million

Increase in sales = Sales at 100% capacity - Current sales

= $1,346.15 - $875

= $471.15 million

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