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7. Posters.com is a small Internet retailer of high-quality posters. The company has $720,000 in operating assets and fixed expenses of $167,000 per year. With

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Posters.com is a small Internet retailer of high-quality posters. The company has $720,000 in operating assets and fixed expenses of $167,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5,300,000 per year. The companys contribution margin ratio is 8%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 8 cents.

Required:

1. Complete the following table showing the relation between sales and return on investment (ROI).

2. What happens to the companys return on investment (ROI) as sales increase?

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Complete the following table showing the relation between sales and return on invest answers to 2 decimal places.) rences Sales Net Operating ROI Income $ 217,000 4,800,000 o 4,900,000 Average Operating Assets $ 720,000 $ 720,000 $ 720,000 $ 720,000 720,000 $ 720,000 % % w 5,000,000 5,100,000 5,200,000 5,300,000

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