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Dairyplus processes organic milk into plain yogurt. (Click the icon to view additional information.) Should Dairypluscontinue to sell only the gallon-size plain yogurt (sell
Dairyplus processes organic milk into plain yogurt. (Click the icon to view additional information.) Should Dairypluscontinue 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.) Costs Sell As Is Process Further Difference Expected revenue from selling by the gallon 1,500 Expected revenue from selling individual portions 1,792 $ 292 Additional costs of selling as is by the gallon (24) Additional costs of processing individual portions (544) (520) 1,476 $ 1,248 $ (228) Total net revenue Decision: Based on this analysis, it is more profitable to sell plain yogurt in bulk containers More info Dairyplus sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $850, yields 150 gallons of plain yogurt. Dairyplus sells the one-gallon tubs for $10 each, and spends $0.16 for each plastic tub. Dairyplus has recently begun to reconsider its strategy. Dairyplus wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. Dairyplus could further process each batch of plain yogurt into 3,200 individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. Dairyplus would sell each individual portion for $0.56. Packaging would cost $0.07 per portion, and fruit would cost $0.10 per portion. Fixed costs would not change. Print Done
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