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6. Dairymaid processes organic milk into plain yogurt. Dairymaid sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $880, yields 615 gallons of plain yogurt. The company sells the one-gallon tubs for $5.00 each and spends $0.12 for each plastic tub. Dairymaid has recently begun to reconsider its strategy. Management wonders if it would be more profitable to sell individual-sized portions of fruited organic yogurt at local food stores. Dairymaid could further process each batch of plain yogurt into 13.120 individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. Dairymaid would sell each individual portion for $0.44. Packaging would cost $0.05 per portion, and fruit would cost $0.09 per portion. Fixed costs would not change. Should Dairymaid continue to sell only the gallon-sized plain yogurt (sell as is) or convert the plain yogurt into individual-sized portions of fruited yogurt (process further)? Why? Calculate the net benefit per batch under each alternative. (Enter a "0" for any zero amounts. Round the net benefit per batch to the nearest whole dollar.) Sell as gallon-size Sell as individual containers portions (1) Less: (2) (3) Net benefit per unit Net benefit per batch Based on this analysis, it is more profitable to sell (5) As long as (6) Number of units produced per year O Sales revenue per unit Number of units produced per year O Sales revenue per unit (1) O O Contribution margin per unit Additional processing costs per unit-adding fruit Fixed expenses O Additional processing costs per unit-packaging O Fixed expenses per unit O Contribution margin O Number of units produced per batch (2) O O Contribution margin per unit O Additional processing costs per unit-adding fruit O Fixed expenses Additional processing costs per unit-packaging O Fixed expenses per unit O Contribution margin Number of units produced per batch Number of units produced per year O Sales revenue per unit Number of units produced per year O Sales revenue per unit (3) O O Contribution margin per unit Additional processing costs per unit-adding fruit O Fixed expenses O Additional processing costs per unit-packaging Fixed expenses per unit O Contribution margin O Number of units produced per batch (4) O Additional processing costs per unit-adding fruit O Additional processing costs per unit-packaging O Contribution margin Contribution margin per unit Fixed expenses Fixed expenses per unit O Number of units produced per batch (5) Ofruited yogurt as individual portions O plain yogurt in bulk gallon containers (6) O the demand continues for bulk gallon containers Othere is a demand for individual portions
