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This is the difference between 100% and 85%. To answer this question, it is necessary to calculate what sales would be at 100% of capacity usage, then determine the percentage increase in sales represented by that amount.
This answer results from dividing $32,200 by $100,000 and multiplying the result by .85. To answer this question, it is necessary to calculate what sales would be at 100% of capacity usage, then determine the percentage increase in sales represented by that amount.
The company's fixed assets are presently being used at 85% of their capacity to generate sales of $100,000. If they were being used at 100% of their capacity, sales would be $100,000 ÷ .85, which is $117,647. $117,647 would represent an increase of $17,647, or 17.6% of $100,000. Therefore, sales could grow at 17.6% before the company would need to purchase additional fixed assets.
This answer results from solving the following equation: 100,000 ? (1 + x) = 32,200. To answer this question, it is necessary to calculate what sales would be at 100% of capacity usage, then determine the percentage increase in sales represented by that amount.