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 $700,000 in operating assets and fixed expenses of $163,000 per year. With this

image text in transcribed
image text in transcribed
Posters.com is a small Internet retailer of high-quality posters. The company has $700,000 in operating assets and fixed expenses of $163,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $4,700,000 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 relation between sales and return on investment (ROI). 2. What happens to the company's return on investment (ROI) as sales increase? Net Operating ROI Average Operating Assets Income 4,200,000 $ 257,000 $ 700,000 $ 700,000 4,300,000 $ 4,400,000 $ 700,000 4,500,000 $ 4,600,000 $ 4,700,000 $ $ $ 700,000 700,000 700,000

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_2

Step: 3

blur-text-image_3

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

The Next Step Advanced Medical Coding And Auditing 2013

Authors: Carol J. Buck MS CPC CCS-P

1st Edition

1455744859, 978-1455744855

Students also viewed these Accounting questions