The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity. Often, this is not the case. Assume that Rosengarten was operating at $90$ percent capacity. Full$-$capacity sales would be $$1,000/\mathrm{.}90=$ $$1,111.$ The balance sheet shows $$1,800$ in fixed assets. The capital intensity ratio for the company is:

Capital intensity ratio $=$ Fixed assets$/$Full$-$capacity sales $=$ $$1,800/$$$1,111=1\mathrm{.}62$

This means that Rosengarten needs $$1\mathrm{.}62$ in fixed assets for every dollar in sales when it reaches full capacity. At the projected sales level of $$1,250,$ it needs $$1,250\backslash$times $1\mathrm{.}62=$ $$2,025$ in fixed assets, which is $$225$ lower than our projection of $$2,250$ in fixed assets. So$,$ EFN is $$565225=$ $$340.$

Blue Sky Manufacturing, Incorporated, is currently operating at $90$ percent of fixed asset capacity. Current sales are $$668,000$ and sales are projected to grow to $$860,000.$ The current fixed assets are $$648,000.$

How much in new fixed assets is required to support this growth in sales?