Question: The baseball division of homer sports manufactures and sells baseballs. Assume production equals sales. Budgeted data for February 2011 are as follows:
current assets $ 400,000
Long term assets 600,000
total assets $1,000,000
production output 200,000 baseballs per month
Target ROI (Operating income / total assets) 30%
Fixed costs $400,000 per month
variable cost $4 per baseball
1. Compute the minimum selling price per baseball necessary to achieve the target ROI of 30%
2. Using the selling price from requirement 1, separate the target ROI into its two componenets using the Dupont method.