Images.com is a small Internet retailer of high-quality posters. The company has $730,000 in operating assets and fixed expenses of $160,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $4.9 million per year. The company,s 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. 1. Complete the following table showing the relationship between sales and return on investment (ROI). 2. What happens to the company's return on investment (ROI) as sales increase?
Images.com is a small Internet retailer of high-quality posters. The company has $730,000 in operating assets and fixed expenses of $160,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $4.9 million per year. The company,s 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. 1. Complete the following table showing the relationship between sales and return on investment (ROI). 2. What happens to the company's return on investment (ROI) as sales increase?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Images.com is a small Internet retailer of high-quality posters. The
company has $730,000 in operating assets and fixed expenses of
$160,000 per year. With this level of operating assets and fixed expenses,
the company can support sales of up to $4.9 million per year. The
company,s 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.
1. Complete the following table showing the relationship between sales
and return on investment (ROI).
2. What happens to the company's return on investment (ROI) as sales
increase?
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