Posters.com is a small Internet retailer of high-quality posters. The company has $740,000 in operating assets and fixed expenses of$162,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $4,800,000 peryear. The company's contribution margin ratio is 10%, which means that an additional dollar of sales results in additional contributionmargin, and net operating income, of 10 cents.Required:1. Complete the following table showing the relation between sales and return on investment (ROI).2. What happens to the company's return on investment (ROI) as sales increase?Complete this question by entering your answers in the tabs below.Required 1 Required 2Complete the following table showing the relation between sales and return on investment (ROI). (Round your percentageanswers to 2 decimal places.)Sales$ 4,300,000$4,400,000$ 4,500,000$ 4,600,000$4,700,000$ 4,800,000Net OperatingIncome$ 268,000AverageOperatingAssets$$$$$$740,000740,000740,000740,000740,000740,000ROI %< Required 1Required 2 >

Return on Investment = Net operating income / Average operating assets Computation of the net…

Answered: Posters.com is a small Internet…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Fire Company is a service firm with current service revenue of $900,000 and a 40% contribution margin. Its fixed costs are $200,000. Ice Company has current sales of $420,000 and a 30% contribution margin. Its fixed costs are $90,000. What is the margin of safety for Fire and Ice? Compare the margin of safety in dollars between the two companies. Which is stronger? Compare the margin of safety in percentage between the two companies. Now which one is stronger? Compute the degree of operating leverage for both companies. Which company will benefit most from a 10% increase in sales? Explain why. Illustrate your findings in an Income Statement that is increased by 10%.
ces Olongapo Sports Corporation distributes two premium golf balls-Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Sales CM ratio Fixed expenses total $183,750 per month. Flight Dynamic $ 150,000 Required 1 Product Required 2 Required 3 80% Required: 1. Prepare a contribution format income statement for the company as a whole. 2. What is the company's break-even point in dollar sales based on the current sales mix? 3. If sales increase by $100,000 a month, by how much would you expect the monthly net operating income to increase? Break-even point in dollar sales Sure Shot $ 250,000 36% Complete this question by entering your answers in the tabs below. Total $ 400.000 > What is the company's break-even point in dollar sales based on the current sales mix? Note: Do not round intermediate calculations.
Data concerning Wislocki Corporation's single product appear below: Selling price Variable expenses Contribution margin Per Unit Percent of Change in net operating income 25% Fixed expenses are $1,051,000 per month. The company is currently selling 9,700 units per month. Required: The marketing manager would like to introduce sales commissions as an Incentive for the sales staff. The marketing manager has proposed a commission of $11 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $103,000 per month. The marketing manager predicts that Introducing this sales Incentive would Increase monthly sales by 470 units. What should be the overall effect on the company's monthly net operating Income of this change?
Unan Inc. has decided to focus strictly on producing and selling one type of pillow. For the coming year, Unan hopes to make 25% profit on sales. Fixed costs are set at Php51,000 and variable costs per unit is Php9.50. If pillows are sold at Php15.00 each, how many pillows must be sold to meet the profit goal?
Oriole Cupcakes Co. is selling cupcakes for $10 for a box of one dozen. Oriole has fixed costs equaling $130800 per year, and its accounting firm has determined the contribution margin ratio on each box of donuts to be 50%. Oriole is currently averaging monthly sales of 2860 boxes of donuts, and the company has a tax rate of 25%. Based on this information, Oriole Cupcakes has been averaging monthly net income of O $2664 O $2300 O $2550 O $2529
Last year, Flynn Company reported a profit of $70,000 when sales totaled $520,000 and the contribution margin ratio was 40%. If fixed expenses increase by $10,000 next year, what amount of sales will be necessary in order for the company to earn a profit of $80,000?
Posters.com is a small Internet retailer of high-quality posters. The company has $810,000 in operating assets and fixed expenses of $162,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $4,600,000 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: Complete the following table showing the relation between sales and return on investment (ROI). What happens to the company’s return on investment (ROI) as sales increase? req 1 Complete the following table showing the relation between sales and return on investment (ROI). (Round your percentage answers to 2 decimal places.) Sales Net Operating Income Average Operating Assets ROI $4,100,000 $248,000 $810,000 % $4,200,000 $810,000 % $4,300,000 $810,000 % $4,400,000…
Team Spirit Calendars imprints calendars with college names. The company has fixed expenses of $1,065,000 each month plus variable expenses of $3.50 per carton of calendars. Of the variable expense, 71% is cost of goods sold, while the remaining 29% relates to variable operating expenses. The company sells each carton of calendars for $13.50. Read the requirements. Requirement 1. Compute the number of cartons of calendars that Team Spirit Calendars must sell each month to breakeven. Begin by determining the basic income statement equation. Variable expenses Sales revenue ... The breakeven sales is 106,500 cartons. Fixed expenses Using the basic income statement equation you determined above solve for the number of cartons to break even. = Operating income Requirement 2. Compute the dollar amount of monthly sales Team Spirit Calendars needs in order to earn $304,000 in operating income. Begin by determining the formula. Fixed expenses + Target operating income ( (Round the contribution…
Rothe Company manufactures and sells a single product that it sells for $90 per unit and has a contribution margin ratio of 35%. The company's fixed expenses are $46,800. If Rothe desires a monthly target net operating income equal to 15% of sales, the number of sales in units will have to be (rounded)?
Reliant Chairs sells designer seating to consumers through retail outlets. Total industry sales for the market last year were $128 million, with Reliant’s sales representing 6.5% of that total. Contribution margin is 18%. Reliant’s sales force calls on retail outlets and each sales rep earns $45,500 per year, plus 2.5% commission on all sales. Retailers receive a 38% margin on selling price and generate average revenue of $12,000 per outlet for Reliant. The marketing manager has suggested increasing customer advertising by $200,000. By how much would dollar sales need to increase to break even on this expenditure? What increase in overall market share does this represent? Another suggestion is to hire 3 more sales representatives to gain new consumer retail accounts. How many new retail outlets would be necessary to break even on the increased cost of adding the 3 sales reps? A final suggestion is to make a 10% price reduction across the board. By how much would dollar sales need to…
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