First, 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 The exact amount of capacity to maintain can be planned for using capacity requirements planning, which calculates required capacity levels at different sales levels and product mixes How to Reduce Capacity Costs It is possible to largely eliminate capacity costs by shifting work to third partiesRound your answer to the nearest dollar Do not round
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