A company is thinking about significantly expanding its production capacity. 1) Determine the variables needed for this expansion ? 2) Identify the sources of information needed to estimate the impact of the expansion on profits?

This question has 2 parts:

1) Expand production capacity: How to sell the extra goods Look into Sales growth-analysis on how to increase sales due to extra capacity Look into Cost growth-cost will increase, need to manage average cost

2) Impact on Profit: Formula : Sales - Cost = Profit.

Cost need to be managed effectively. You need look into the capital cost due to expansion. Fixed cost vs variable cost.. Ultimately lower average cost to be achieved so that your profit will increase.