Question
This means that Rosengarten needs $1.62 in fixed assets for every dollar in sales when it reaches full capacity. At the projected sales level of
This means that Rosengarten needs $1.62 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 1.62 = $2,025 in fixed assets, which is $225 lower than our projection of $2,250 in fixed assets. So, EFN is $565 225 = $340. Blue Sky Mfg., Inc., is currently operating at 90 percent of fixed asset capacity. Current sales are $712,000. How much can sales increase before any new fixed assets are needed? (Do not round intermediate calculations and round your answer to the nearest dollar amount, e.g., 32.)
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