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.