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All Natural processes organic milk into plain yogurt. All Natural sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch,
All Natural processes organic milk into plain yogurt. All Natural sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $800, yields 615 gallons of plain yogurt. The company sells the one-gallon tubs for $8.00 each and spends $0.10 for each plastic tub. All Natural has recently begun to reconsider its strategy. Management wonders if it would be more profitable to sell individual-sized portions of fruited organic yogurt at local food stores. All Natural could further process each batch of plain yogurt into 13,120 individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. All Natural would sell each individual portion for $0.40. Packaging would cost $0.06 per portion, and fruit would cost $0.12 per portion. Fixed costs would not change. Should All Natural continue to sell only the gallon-sized plain yogurt (sell as is) or convert the plain yogurt into individual-sized portions of fruited yogurt (process further)? Why? Calculate the net benefit per batch under each alternative. (Enter a "0" for any zero amounts. Round the net benefit per batch to the nearest whole dollar.) Sell as gallon-size Sell as individual portions containers Less: Net benefit per unit Net benefit per batch Additional processing costs per unit-adding fruit Additional processing costs per unit-packaging Contribution margin Contribution margin per unit Fixed expenses Fixed expenses per unit Number of units produced per batch Number of units produced per year Sales revenue per unit plain yogurt 1 0, yields 615 b. All Natural -sized portion 20 individual All Natural w per portion. Fi is) or convert "0" for any zer Sell as gallon container
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