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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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  1. 3 November, 11:17
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    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
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