=+7-25 KK Target rate of return on investment, activity-based costing OBJECTIVE 1 Top Sport (TS) distributes video games to retail stores and video game venues. It has a simple business model: order the video games, catalogue the games on TS’s website, deliver and provide onsite support and bill and collect from the customers. TS reported the following costs in April 2013:

Activity Cost driver Quantity Cost per unit of cost driver Ordering Number of game vendors 40 $250 per vendor Cataloguing Number of new titles 20 $100 per title Delivery and support Number of deliveries 400 $15 per delivery Billing and collection Number of customers 300 $50 per customer In April 2013, TS purchased 12000 video game disks at an average cost of $15 per disk, and it sold them at an average price of

$22 per disk. The catalogue on the website and the customer interactions that occur during delivery are TS’s main marketing inputs.

TS incurs no other costs.

Required 1 Calculate TS’s operating profit for April 2013. If the monthly investment in TS is $300000, what rate of return on investment does the business earn?