EXERCISE 9-10 Cost-Volume-Profit Analysis and Return on Investment (ROI) [LO9-1]Posters.com is a small Internet retailer of high-quality posters. The company has $1,000,000 in operating assetsand fixed expenses of $150,000 per year. With this level of operating assets and fixed expenses, the companycan support sales of up to $3,000,000 per year. The company's contribution margin ratio is 25%, which meansthat an additional dollar of sales results in additional contribution margin, and net operating income, of 25 cents.Required:1. Complete the following table showing the relation between sales and return on investment (ROI).Net OperatingIncomeSalesAverageOperating AssetsROI$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$2,900,000$?$3,000,000$?$1,000,000$1,000,000222222??????2. What happens to the company's return on investment (ROI) as sales increase? Explain.

ROI is calculated by dividing net operating income by average operating assets. Net operating income…

Answered: EXERCISE 9-10 Cost-Volume-Profit…

EBK CFIN

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Chapter15: Managing Short-term Assets

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