Question
Marriott Farm, Inc. produces apples that it sells to local grocery stores. The Farm is considering turning the apples into applesauce. The local grocery stores
Marriott Farm, Inc. produces apples that it sells to local grocery stores. The Farm is considering turning the apples into applesauce. The local grocery stores have stated that they would be willing to pay $2.35 per jar of applesauce. The Farm produces 750,000 apples per year and sells them to the grocery stores for 20 cents each. The apples cost $90,000 to produce. Each jar of applesauce would require 5 apples. Additional costs related to the production is estimated to be $1.25 per jar. Should Marriott Farm sell the apples as is or convert the apples to applesauce? Support your answer based on relevant revenues and costs.
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