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Best Dairy processes organic milk into plain yogourt. Best Dairy sells plain yogourt to hospitals, nursing homes, and restaurants in bulk, 4-L containers. Each batch,
Best Dairy processes organic milk into plain yogourt. Best Dairy sells plain yogourt to hospitals, nursing homes, and restaurants in bulk, 4-L containers. Each batch, processed at a cost of $850, yields 2,700 (675 4-L) containers of plain yogourt. Best Dairy sells the 4-L tubs for $6.00 each and spends $0.18 for each plastic tub. Best Dairy has recently begun to reconsider its strategy to sell individual-size portions of fruited organic yogourt at local food stores. Best Dairy 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 $0.50. Packaging would cost $0.06 per portion, and fruit would cost $0.15 per portion. Fixed costs would not change. Should Best Dairy 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 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
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