Exercise 11-10 Cost-Volume-Profit Analysis and Return on Investment (ROI) [LO11-1]

Posters.com is a small Internet retailer of high-quality posters. The company has $820,000 in operating assets and fixed expenses of $170,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5,400,000 per year. The companys contribution margin ratio is 11%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 11 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?