Question
Happy Cow processes organic milk into plain yogourt.HappyCow sells plain yogourt tohospitals, nursinghomes, and restaurants inbulk, 4-L containers. Eachbatch, processed at a cost of$800, yields
Happy Cow processes organic milk into plain yogourt.HappyCow
sells plain yogourt tohospitals, nursinghomes, and restaurants inbulk, 4-L containers. Eachbatch, processed at a cost of$800, yields 2,000 L(500 4-L) containers of plain yogourt.HappyCow sells the4-L tubs for$6.00 each and spends$0.10 for each plastic tub.HappyCow has recently begun to reconsider its strategy to sellindividual-size portions of fruited organic yogourt at local food stores.HappyCow could further process each batch of plain yogourt into 10,526 individual portions(190 mLeach) 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$0.08 perportion, and fruit would cost$0.10 per portion. Fixed costs would not change. ShouldHappyCow continue to sell only the4-L tubs of plain yogourt(sell as-is) or convert the plain yogourt intoindividual-sized portions of fruited yogourt(process further)?Why?
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