# Hodgkiss Mig, Inc, is currently operating at only 92 percent of fixed asset capacityCurrent sales are \$780,000. Fixed assets are \$470,000 and sales are projected to growto \$880,000. How much in new foxed assets are required to support this growth in sales?Assume the company wants to operate at full capacity (Do not round intermediatecelculetions and round your answer to 2 decimal places,e.g.. 32.16)O Answer is complete but not entirely correct.New fxed assets487 B72000

Question
Step 1

Step1: Calculating the value of full capacity sales. We have,

Full capacity sales = Current Sales / Operating capacity of fixed Asset

Here,

Current Sales = \$ 780,000

Operating capacity of fixed asset = 92%

By substituting these value in the above formula. We have,

Full capacity sales = \$ 780,000 / 92%

Full capacity sales = \$ 847,826.09

Therefore, the value of full capacity sales shall be \$ 847,826.09

Step 2

Step2: Calculating the value of capacity intensity ratio. We have,

Capacity intensity ratio = Fixed Assets / Full capacity sales

Here,

Fixed Assets = \$ 470,000

Full capacity sales = \$ 847,826.09

By substituting these value in the above ...

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