Question
Posters.com is a small Internet retailer of high-quality posters. The company has $760,000 in operating assets and fixed expenses of $154,000 per year. With this
Posters.com is a small Internet retailer of high-quality posters. The company has $760,000 in operating assets and fixed expenses of $154,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $4,500,000 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?
Required 1 Required 2 Complete the following table showing the relation between sales and return on investment (R answers to 2 decimal places.) Sales Net Operating Average Operating ROI Income Assets % $ 166,000 $ 760,000 % $ 760,000 % 4,000,000 $ 4,100,000 $ 4,200,000 $ 4,300,000 $ 760,000 % $ 760,000 % $ 760,000 % 4,400,000 $ 4,500,000 $ 760,000 %
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