Question
Posters.com is a small Internet retailer of high-quality posters. The company has $870,000 in operating assets and fixed expenses of $157,000 per year. With this
Posters.com is a small Internet retailer of high-quality posters. The company has $870,000 in operating assets and fixed expenses of $157,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5,200,000 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?
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