VIPSolutionsGive step-by-step solution with explanation and final answer:en ogi hd se of $1.820.000 ast yea nF sets of $280,000 Gen that Neon oc esr beng cd at ol 956 of capacky, then the emis fixed asset tumover ratio ws |]. (Note: Round your answer to tus decal laces) How much sales coud Newtown Propane have supported wth ks curent eva of fied aisets? (Nota! Round your ste to the nearest whole umber) 0 suman I 0 susssom | il 0 sun | O $2.107.368. {LINHA i Wha vu coda thu i's Fd ees var bg nerd 4 ud th Hr oe ek hs A i (ei Rd rt Src to deel pas) © rae IN | I ) 2 J spain sa Siete Neue i vcr ses roof 4 fo ch yu 1 sr nd nt fad es rn AL An bh es pnd bts ors ons oc is vara, {ont ord vo Pr Sb sr
Question:
Give step-by-step solution with explanation and final answer:
en ogi hd se of $1.820.000 ast yea nF sets of $280,000 Gen that Neon oc esr beng cd at ol 956 of
capacky, then the emis fixed asset tumover ratio ws |]. (Note: Round your answer to tus decal laces)
How much sales coud Newtown Propane have supported wth ks curent eva of fied aisets? (Nota! Round your ste to the nearest whole
umber)
0 suman I
0 susssom | il
0 sun |
O $2.107.368. {LINHA
i
Wha vu coda thu i's Fd ees var bg nerd 4 ud th Hr oe ek hs A i (ei Rd rt
Src to deel pas)
© rae IN | I
) 2
J spain
sa
Siete Neue i vcr ses roof 4 fo ch yu 1 sr nd nt fad es rn AL An bh es pnd
bts ors ons oc is vara, {ont ord vo Pr Sb sr
This is AI generated Response.
Asked by: YASHWANT SHARMA
Created at: 2025-06-16 06:39:03
Asked by: YASHWANT SHARMA
Created at: 2025-06-16 06:39:03
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Let's break down the problem step by step:
### 1. **Fixed Asset Turnover Ratio (at 95% Capacity)**
**Formula:**
Fixed Asset Turnover Ratio = Sales / Fixed Assets
However, since the fixed assets were only used at 95% of their capacity, the "effective" fixed assets used = Fixed Assets × 95%
Given:
- Sales = **$1,820,000**
- Fixed Assets = **$380,000**
- Capacity Used = **95%**
**Effective Fixed Assets Used** = $380,000 × 0.95 = **$361,000**
**Fixed Asset Turnover Ratio** = Sales / Effective Fixed Assets Used
= $1,820,000 / $361,000
= **5.04** (rounded to two decimal places)
---
### 2. **Maximum Sales Supported at Full Capacity**
If assets were used at 100% capacity:
**Maximum Sales = Fixed Asset Turnover Ratio × Fixed Assets**
But, let's use the original ratio calculated from above but now with full capacity (i.e., all $380,000):
**Maximum Sales = $380,000 × (Sales / $361,000)**
But, easier is:
If $1,820,000 sales is at 95% capacity, 100% capacity sales would be:
= $1,820,000 / 0.95
= **$1,915,789** (rounded to the nearest whole number)
So, the correct choice is:
**$1,915,789**
---
### 3. **Target Fixed Assets to Sales Ratio**
**Formula:**
Fixed Assets to Sales Ratio = Fixed Assets / Maximum Sales
= $380,000 / $1,915,789
= 0.1984
= **19.84%** (rounded to two decimal places)
So, the correct choice is:
**19.84%**
---
### 4. **Forecasting Sales Growth of 18%**
Forecasted Sales = Maximum Sales × (1 + Sales Growth Rate)
= $1,915,789 × 1.18
= $2,260,634.02
**Expected Fixed Asset Turnover Ratio**
= Forecasted Sales / Total Fixed Assets
= $2,260,634 / $380,000
= **5.95** (rounded to two decimal places)
---
## **Summary of Answers**
1. **Fixed asset turnover ratio** = **5.04**
2. **Maximum sales supported** = **$1,915,789**
3. **Target fixed assets to sales ratio** = **19.84%**
4. **Expected fixed asset turnover ratio (with 18% growth)** = **5.95**
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