Hodgkiss Mfg., Inc., is currently operating at only 91 percent of fixed asset capacity. Current sales are $ 715,000. How fast can sales grow before any new fixed assets are needed?

9.89%

Explanation:

For computing the maximum sales growth, first, we have to determine the full capacity sales which are shown below:

= Current sales : Current operating fixed asset capacity

= $715,000 : 91%

= $785,714.29

Now the maximum sales growth would be

= (Full capacity sales : Current sales) - 1

= ($785,714.29 : $715,000) - 1

= 9.89%