The level of sales of E Company at full capacity. Introduction: Excess Capacity Adjustment: The Company most of the time is not achieving the full capacity level, so the adjustment to this is needed. The changes made in the capacity to achieve optimum level are the excess capacity adjustment.

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Answer 1

Question

Chapter 16, Problem 12P

a.

Summary Introduction

To compute: The level of sales of E Company at full capacity.

Introduction:

Excess Capacity Adjustment:

The Company most of the time is not achieving the full capacity level, so the adjustment to this is needed. The changes made in the capacity to achieve optimum level are the excess capacity adjustment.

b.

Summary Introduction

To compute: Target fixed asset sales ratio of E Company.

c.

Summary Introduction

To compute: The amount of fixed asset when sales increase by 30%.

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Walter Industries has $5 billion in sales and $1.7 billion in fixed assets. Currently, the company’s fixed assets are operating at 90% of capacity. What level of sales could Walter Industries have obtained if it had been operating at full capacity? b.What is Walter’s Target fixed assets/Sales ratio? c.If Walter’s sales increase 12%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio?

Walter Industries has $5 billion in sales and $1.7 billion in fixed assets. Currently, the company’s fixed assets are operating at 90% of capacity. a.What level of sales could Walter Industries have obtained if it had been operating at full capacity? b.What is Walter’s Target fixed assets/Sales ratio? c.If Walter’s sales increase 12%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio?

Water and Power Co. (W&P) currently has $575,000 in total assets and sales of $1,400,000. Half of W&P’s total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 22% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is . (Note: Round your answer to the nearest whole number.) W&P was using its fixed assets at only 95% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? (Note: Round your answer to the nearest whole number.) $1,547,368 $1,768,421 $1,473,684 $1,694,737 When you consider that W&P’s fixed assets were being underused, its target fixed assets to sales ratio should be %. (Note: Round your answer to two decimal places.) When you consider that W&P’s fixed assets were being underused, how much fixed assets must W&P raise to…

Answer 2

Question

Chapter 16, Problem 12P

a.

Summary Introduction

To compute: The level of sales of E Company at full capacity.

Introduction:

Excess Capacity Adjustment:

The Company most of the time is not achieving the full capacity level, so the adjustment to this is needed. The changes made in the capacity to achieve optimum level are the excess capacity adjustment.

b.

Summary Introduction

To compute: Target fixed asset sales ratio of E Company.

c.

Summary Introduction

To compute: The amount of fixed asset when sales increase by 30%.

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Answer 3

Question

Chapter 16, Problem 12P

a.

Summary Introduction

To compute: The level of sales of E Company at full capacity.

Introduction:

Excess Capacity Adjustment:

The Company most of the time is not achieving the full capacity level, so the adjustment to this is needed. The changes made in the capacity to achieve optimum level are the excess capacity adjustment.

b.

Summary Introduction

To compute: Target fixed asset sales ratio of E Company.

c.

Summary Introduction

To compute: The amount of fixed asset when sales increase by 30%.

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Answer 4

Question

Chapter 16, Problem 12P

a.

Summary Introduction

To compute: The level of sales of E Company at full capacity.

Introduction:

Excess Capacity Adjustment:

The Company most of the time is not achieving the full capacity level, so the adjustment to this is needed. The changes made in the capacity to achieve optimum level are the excess capacity adjustment.

b.

Summary Introduction

To compute: Target fixed asset sales ratio of E Company.

c.

Summary Introduction

To compute: The amount of fixed asset when sales increase by 30%.

Expert Solution & Answer

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Answer 5

Chapter 16, Problem 12P

a.

Summary Introduction

To compute: The level of sales of E Company at full capacity.

Introduction:

Excess Capacity Adjustment:

The Company most of the time is not achieving the full capacity level, so the adjustment to this is needed. The changes made in the capacity to achieve optimum level are the excess capacity adjustment.

b.

Summary Introduction

To compute: Target fixed asset sales ratio of E Company.

c.

Summary Introduction

To compute: The amount of fixed asset when sales increase by 30%.

Answer 6

Chapter 16, Problem 12P

a.

Summary Introduction

To compute: The level of sales of E Company at full capacity.

Introduction:

Excess Capacity Adjustment:

The Company most of the time is not achieving the full capacity level, so the adjustment to this is needed. The changes made in the capacity to achieve optimum level are the excess capacity adjustment.

Answer 7

Chapter 16, Problem 12P

a.

Summary Introduction

To compute: The level of sales of E Company at full capacity.

Introduction:

Excess Capacity Adjustment:

The Company most of the time is not achieving the full capacity level, so the adjustment to this is needed. The changes made in the capacity to achieve optimum level are the excess capacity adjustment.

Answer 8

b.

Summary Introduction

To compute: Target fixed asset sales ratio of E Company.

Answer 9

b.

Summary Introduction

To compute: Target fixed asset sales ratio of E Company.

Answer 10

c.

Summary Introduction

To compute: The amount of fixed asset when sales increase by 30%.

Answer 11

c.

Summary Introduction

To compute: The amount of fixed asset when sales increase by 30%.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 16 - Prob. 1Q Ch. 16 - Assume that an average firm in the office supply...Ch. 16 - Would you agree that computerized corporate...Ch. 16 - Certain liability and net worth items generally...Ch. 16 - Suppose a firm makes the following policy changes....Ch. 16 - AFN EQUATION Carlsbad Corporations sales are...Ch. 16 - AFN EQUATION Refer to Problem 16-1. What...Ch. 16 - AFN EQUATION Refer to Problem 16-1 and assume that...Ch. 16 - PRO FORMA INCOME STATEMENT Austin Grocers recently...Ch. 16 - EXCESS CAPACITY Williamson Industries has 7...

The level of sales of E Company at full capacity. Introduction: Excess Capacity Adjustment: The Company most of the time is not achieving the full capacity level, so the adjustment to this is needed. The changes made in the capacity to achieve optimum level are the excess capacity adjustment.

Solution Summary: The author calculates the level of sales of E Company at full capacity.

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To compute: Target fixed asset sales ratio of E Company.

To compute: The amount of fixed asset when sales increase by 30%.

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