Question

The Outlet has a capital intensity ratio of .87 at full capacity. Currently, total assets are $48,900 and current sales are $53,600. At what level of capacity is the firm currently operating?A. 87.00 percentB. 91.67 percentC. 95.36 percentD. 96.08 percentE. 98.21 percent

Answer 1

Answer:

correct option is C. 95.36 percent

Explanation:

given data

capital intensity ratio = 0.87

total assets = $48,900

current sales = $53,600

solution

first we get here Sales at full capacity by Capital Intensity Ratio that is

Capital Intensity Ratio = Total Assets ÷  Sales   ..................1

put here value and we get

Sales  = $\frac{48900}{0.87}$  

Sales  = $56,206.90

and

now we get Level of capacity is the firm currently operating that is express as

Level of capacity = Current sales ÷ Sales at full capacity  .................2

put here value and we get

Level of capacity = $\frac{53600}{56206.90}$  

Level of capacity =  95.36%

so correct option is C. 95.36 percent