E7-14 (Algo) Analyzing Sell-or-Process-Further Decision [LO 7-2, 7-6]

Wholesome Dairy processes milk. The cost of the milk processing is $1,330,000. Wholesome is looking to increase its net income and is exploring the possibility of expanding its products to include cream and/or ice cream. It takes 2 gallons of milk to make a half gallon of ice cream. Additional Processing Product Units Produced Selling Price costs 798,000 gallons $3.05 per gallon Ice Cream 6.13 per half gallon $ 0.28 per half gallon Milk 2 Required: 1. How many half gallons of ice cream can Wholesome make? 2. What are the additional processing costs to convert the milk to ice cream? 3. Should Wholesome sell the milk or process it further and sell ice cream? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How many half gallons of ice cream can Wholesome make? Number of half gallons of ice cream Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What are the additional processing costs to convert the milk to ice cream? Additional processing cost Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Should Wholesome sell the milk or process it further and sell ice cream? Decision