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25 March, 09:38

Williamson Industries has $7 billion in sales and $2 billion in fixed assets. Currently, the company's fixed assets are operating at 90% of capacity. What level of sales could Williamson Industries have obtained if it had been operating at full capacity

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  1. 25 March, 09:41
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    Answer: Williamson industries would have obtained $7.78 billion in sales

    Explanation: According to the question, the company is having a total of $2 billion in fixed assets. The fixed assets are currently operating at 90% (0.9) of its total capacity. At his level, the company is able to achieve a sales figure of $7 billion. The implication is as follows;

    Fixed assets (at 100%) = 2 billion

    Fixed assets (at 90%) = 2 * 0.9

    Fixed assets (at 90%) = 1.8

    If the company utilizes $1.8 billion to achieve a $7 billion sales figure, then operating at full capacity (100%) would yield the following;

    7/x = 90/100

    (Where x equals sales level at 100% capacity)

    7/x = 0.9

    Cross multiply

    x = 7/0.9

    x = 7.7777 ...

    x ≈ 7.78

    Therefore, if Williamson Industries had been operating at full capacity, it would have obtained a sales level of $7.78 billion
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