3 If a firm is operating at full capacity, the firm is a Generating the maximum level of sales given the current level of inventory b Operating 24 hours a day c Operating at the highest possible debtequity ratio d Generating the maximum amount of sales given the available level of cash e Producing the maximum level of sales given the currentFirst, we need to calculate full capacity sales, which is Full capacity sales = $905,000 / 80 Full capacity sales = $1,131,250 The capital intensity ratio at full capacity sales is Capital intensity ratio = Fixed assets / Full capacity sales Capital intensity ratio = $364,000 / $1,131,250 Capital intensity ratio = The fixed assets required at full capacity sales is the capital intensityFull capacity sales refers to the optimal sales amount, up to which situation a firm does not need the help of any external financing for the assets In this case, S Mfg Inc is currently operating at 92 percent of fixed asset capacity and its current sales are $690,000
Calculate A Break Even Point In Units And Dollars Principles Of Accounting Volume 2 Managerial Accounting
