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All Natural processes organic milk into plain yogourt. All Natural sells plain yogourt to hospitals, nursing homes, and restaurants in bulk, 4- L containers. Each
All Natural processes organic milk into plain yogourt. All Natural sells plain yogourt to hospitals, nursing homes, and restaurants in bulk, 4- L containers. Each batch, processed at a cost of $890, yields 2,700 (675 4-L) containers of plain yogourt. All Natural sells the 4-L tubs for $6.00 each and spends $0.12 for each plastic tub. All Natural has recently begun to reconsider its strategy to sell individual-size portions of fruited organic yogourt at local food stores. All Natural could further process each batch of plain yogourt into 14,211 individual portions (190 mL each) of fruited yogourt. A recent market analysis indicates that demand for the product exists. Each individual portion would sell for $0.52. Packaging would cost $0.08 per portion, and fruit would cost $0.14 per portion. Fixed costs would not change. Should All Natural continue to sell only the 4-L tubs of plain yogourt (sell as-is) or convert the plain yogourt into individual-sized portions of fruited yogourt (process further)? Why? Calculate the net benefit per batch under each alternative. (If a box is not used in the table, leave the box empty; do not enter a zero. Round the net benefit per batch to the nearest whole dollar.) Sell as 4-L size Sell as individual containers portions Less: Net benefit per unit Net benefit per batch Based on this analysis, it is more profitable to sell as long as
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