uired 1 Required 2 plete the following table showing the relation between sales and return on investment (ROI) ers to 2 decimal places.) ales Net Operating Income Average Operating Assets 800,000 $ 330,000 $ 900,000 $ 890,000 890,000 ROI % %
Posters.com is a small Internet retailer of high-quality posters. The company has $890,000 in operating assets and fixed expenses of $150,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5,300,000 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
2. What happens to the company’s return on investment (ROI) as sales increase?
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