?Assume that a firm did not operate at full capacity in the current year. The firm should increase its plant and equipment only if:
A. ?its variable cost of goods sold ratio changes in the next year with an increase in operations.
B. ?the additional sales forecasted in the next year exceed the unused capacity of the existing assets.
C. ?the internally generated funds are in surplus to support the forecasted increase in sales.
D. ?the addition of fixed assets in large, discrete units results in economies of scale.
E. ?fixed operating costs are not recovered by the revenue from each unit sold by the firm.
Answer: B
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