Enager Inc

Case 11-4 Enager Industries, Inc.

1. Why was McNeil’s new product proposal rejected? Should it have been? Explain.

|ROA CALCULATION FOR EACH NEW PRODUCT |
| |Product A |Product B |Product C |
|Unit Sales |100,000 |75,000 |60,000 |
|Unit Price |18 |21 |24 |
|Total Sales |$1,800,000 |$1,575,000 |$1,440,000 |
| | | | |
|Variable Cost per Unit |9 |9 |9 |
|Variable Costs |900,000 |675,000 |540,000 |
|Fixed Costs |510,000 |510,000 |510,000 |
| | | | |
|Net Income |$390,000 |$390,000 |$390,000 |
| | | | |
|Total Asset Investment |$3,000,000 |$3,000,000 |$3,000,000 |
| |