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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