Images.com is a small Internet retailer of high-quality posters. The company has
ID: 2344374 • Letter: I
Question
Images.com is a small Internet retailer of high-quality posters. The company has $750,000 inoperating assets and fixed expenses of $165,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5.3 millionper year. The companys contribution margin ratio is 9%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 9 cents.
Complete the following table showing the relationship between sales and return on investment (ROI). (Round your percentage answers to 2 decimal places. Omit the "$" and "%" signs in your response.)
What happens to the company's return on investment (ROI) as sales increase? (Round youranswer to 2 decimal places. Omit the "%" sign in your response)
%
Images.com is a small Internet retailer of high-quality posters. The company has $750,000 inoperating assets and fixed expenses of $165,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $5.3 millionper year. The companys 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.
Explanation / Answer
It increases by 1.2%. I typed it into the box just in case. I really hope this helps, best of luck.