Posters.com is a small Internet retailer of high-quality posters. The company has $1,000,000 in operating assets and fixed expense of $150,000 per year. With this level of operating assets and fixed expenses, the company support sales of up to $3,000,000 per year. The company’s contribution margin ratio is 25%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 25 cents.

Required:

Complete the below table showing the relation between sales and return on investment (ROI)

Sales	Net Operating Income	Average Operating Assets	ROI
$2,500,000	$475,000	$1,000,000	?
$2,600,000	$ ?	$1,000,000	?
$2,700,000	$ ?	$1,000,000	?
$2,800,000	$ ?	$1,000,000	?
$2,900,000	$ ?	$1,000,000	?
$3,000,000	$ ?	$1,000,000	?

What happens to the company’s return on investment (ROI) as sales increase? Explain.

Answer rating: 100% (QA)

For 2500000 in sales Contribution margin 2500000 x 025 625000 Net operating income 625000 150000 475... View the full answer