What is Earleton target fixed assets-sales ratio

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Reference no: EM132806219

Problem - EXCESS CAPACITY - Earleton Manufacturing Company has $3 billion in sales and $787,500,000 in fixed assets. Currently, the company's fixed assets are operating at 80% of capacity.

Required -

a. What level of sales could Earleton have obtained if it had been operating at full capacity?

b. What is Earleton's target fixed assets/sales ratio?

c. If Earleton's sales increase 30%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio?

Reference no: EM132806219

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