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 $790,000 in operating assets and fixed expenses of $158,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5,000,000 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?

Required 1 Required 2 Complete the following table showing the relation between sales and return on investment (ROI). (Round your percentage answers to 2 decimal places.) ROI % % % Sales Net Operating Average Operating Income Assets $ 337,000 $ 790,000 4,500,000 $ 790,000 4,600,000 $ 790,000 4,700,000 $ 790,000 4,800,000 $ 790,000 4,900,000 $ 790,000 5,000,000 % % % % Required 1 Required 2 What happens to the company's return on investment (ROI) as sales increase? O Increases Decreases