Question
Posters.com is a small Internet retailer of high-quality posters. The company has $860,000 in operating assets and fixed expenses of $161,000 per year. With this
Posters.com is a small Internet retailer of high-quality posters. The company has $860,000 in operating assets and fixed expenses of $161,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $4,800,000 per year. The companys contribution margin ratio is 9%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 9 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.) Sales Net Operating Average Operating ROI Income Assets % $ 226,000 $ 860,000 % 4,300,000 4,400,000 860,000 % 860,000 % 4,500,000 $ 860,000 % $ 860,000 % 4,600,000 $ 4,700,000 $ 4,800,000 $ 860,000 % nequired
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