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Images.com is a small
Internet retailer of high-quality posters. The company has $770,000
in operating assets and fixed expenses of $169,000 per year. With this
level of operating assets and fixed expenses, the company can support sales
of up to $4.9 million per year. The company’s contribution margin ratio
is 10%, which means that an additional dollar of sales results in additional
contribution margin, and net operating income, of 10 cents.
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Required:
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1.
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Complete the following
table showing the relationship between sales and return on investment (ROI).(Round your percentage answers to 2 decimal
places. Omit the "$" and "%" signs in your response.)
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Sales
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Net Operating
Income |
Average
Operating Assets |
ROI
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$4,400,000
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$271,000
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$770,000
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%
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$4,500,000
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$
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$770,000
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%
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$4,600,000
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$
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$770,000
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%
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$4,700,000
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$
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$770,000
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%
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$4,800,000
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$
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$770,000
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%
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$4,900,000
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$
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$770,000
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%
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2.
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What happens to the
company's return on investment (ROI) as sales increase? (Round your answer to 2 decimal places.
Omit the "%" sign in your response)
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ROI
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%
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