Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Posters.com is a small Internet retailer of high-quality posters. The company has $780,000 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 $780,000 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 $4,500,000 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) (rounded).

image text in transcribed

sales Net operating Average operating ROI Income 4,000,000 199,000 780.000 780,000 4,100,000 780,000 4,200,000 780,000 4,300,000 4,400,000 780,000 4,500,000 780,000 2. What happens to the company's return on investment (ROI) as sales increase? Increases Decreases

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Governmental Accounting Auditing And Financial Reporting

Authors: Michele Mark Levine, Todd Buikema

10th Edition

0891250107, 978-0891250104

More Books

Students also viewed these Accounting questions