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The table below gives a detailed forecast of the size of the market by production volume. Assume that KMS expects to capture 10.20% of
The table below gives a detailed forecast of the size of the market by production volume. Assume that KMS expects to capture 10.20% of the market share in 2019 and expects that percentage will increase by 0.27% per year. KMS currently has the capacity to produce a maximum of 1,100,000 units. What production capacity will KMS require each year? When will an expansion become necessary (that is, when will production volume exceed 1,100,000 units)? Year 2019 2020 2021 2022 2023 2024 Production Volume (000 units) Market Size 10,000 10,438 11,040 11,591 12,198 12,779 The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career. KMS's market share for 2019 is KMS's market share for 2020 is KMS's market share for 2021 is KMS's market share for 2022 is KMS's market share for 2023 is KMS's market share for 2024 is units. (Round to the nearest integer.) units. (Round to the nearest integer.) units. (Round to the nearest integer.) units. (Round to the nearest integer.) units. (Round to the nearest integer.) units. (Round to the nearest integer.) When will an expansion become necessary (that is, when will production volume exceed 1,100,000 units)? (Select the best choice below.) A. In 2022, production will exceed 1,100,000 units and production capacity will have to be increased. B. In 2019, production will exceed 1,100,000 units and production capacity will have to be increased. C. In 2020, production will exceed 1,100,000 units and production capacity will have to be increased. D. In 2021, production will exceed 1,100,000 units and production capacity will have to be increased.
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