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Exercise 11-5 Cost-Volume-Profit Analysis and Return on Investment (ROI) [LO 1] Images.com is a small Internet retailer of high-quality posters. The company has $700.000 in
Exercise 11-5 Cost-Volume-Profit Analysis and Return on Investment (ROI) [LO 1] Images.com is a small Internet retailer of high-quality posters. The company has $700.000 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 $4.8 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). (Round your percentage answers to 2 decimal places. Omit the $ and % signs in your response.) 2. What happens to the company?s return on investment (ROI) as sales increase? (Round your answer to 2 decimal places. Omit the % sign in your response)
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