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Dairyfood processes organic milk into plain yogurt Dairyfood sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at
Dairyfood processes organic milk into plain yogurt Dairyfood sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $820, yields 450 gallons of plain yogurt. Dairyfood sells the one-gallon tubs for $6 each, and spends $0.20 for each plastic tub. Dairyfood has recently begun to reconsider its strategy. Dairyfood wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. Dairyfood could further process each batch of plain yogurt into 9,600 individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. Dairyfood would sell each individual portion for $0.56. Packaging would cost $0.08 per portion, and fruit would cost $0.08 per portion. Fixed costs would not change. Should Dairyfood continue to sell only the gallon-size plain yogurt (sell as is) or convert the plain yogurt into individual-size portions of fruited yogurt (process further)? Why? (Use a minus sign or parentheses for amounts that are typically shown enclosed in parentheses in a sell or process further decision.)
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