Answer:
USD 2064.8/-
Explanation:
Full load sales = USD 880,000/0.95 = USD 926315.79
To get new level of F.A (fixed assets), we need to be sure to find the current percentage of F.A to full capacity sales.
To do so, we first find;
F.A / Full capacity/load sales:
= 520000 / 926315.79
= 0.56136 or 56.13%
Now, we find the total USD amount of F.A which is needed at new sales :
Total fixed assets = 0.56136 x USD 930000
= USD 522064.80
Now the required investment:
sales - current fixed assets:
= USD 522064.80- USD 520,000
= USD 2064.8
We get new fixed assets.
Answer:
The total fixed assets required to support the growth in sales=$549,545.45
Explanation:
The new fixed assets required to support this growth in sales can be calculated using the expression;
Ratio=current fixed assets/current sales
where;
Current sales=$880,000
Current fixed assets=$520,000
replacing;
Ratio=(520,000/880,000)=0.591
To calculate the new fixed assets to support the current growth in sales
Ratio=new fixed assets/new projected sales
where;
New fixed assets=x
New projected sales=$930,000
Ratio=0.591
replacing;
New fixed assets=Ratio×new projected sales
New fixed assets=(0.591×930,000)
New fixed assets=$549,545.45
The total fixed assets required to support the growth in sales=$549,545.45
