Images.com is a small Internet retailer of high-quality posters. The company has $800,000 in operating assets and fixed expenses of $160,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5 million per year. The company€™s contribution margin ratio is 10%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 10 cents.
Required:
1. Complete the following table showing the relationship between sales and return on investment (ROI).

2. What happens to the company€™s return on investment (ROI) as sales increase?Explain.

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Net Operating Income Average Operating Assets Sales ROI $290,000 $4,500,000 $4,600,000 $4,700,000 $4,800,000 $4,900.000 $5,000,000 $800,000 $800,000 $800,000 $800,000 $800,000 $800,000 2