In 2014, Firm X made $500 in sales with $1,200 in fixed assets. Suppose the firm had been operating at 75% of fixed asset capacity. If the firm can increase operating capacity to 85%, how much more in fixed assets would the firm need to achieve $650 in sales?

Question

Business

Uriah Harmon

3 November, 07:50

In 2014, Firm X made $500 in sales with $1,200 in fixed assets. Suppose the firm had been operating at 75% of fixed asset capacity. If the firm can increase operating capacity to 85%, how much more in fixed assets would the firm need to achieve $650 in sales?

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Answers (1)

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Madilynn Pruitt · Answer 1

Firm X will need $568 in fixed assets, arising the total amount to 1,768.

Explanation:

Applying the double rule of three:

1,200 - 500 - 0.75

X - 650 - 0.85

Then:

1,200/X = (500/650) * (0.75/0.85)

X = 1,200 / ((500/650) * (0.75/0.85))

X = 1,768

The increase in fixed asset is:

1,768 - 1,200 = 568