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More Info Naturalfood sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $860, yields
More Info Naturalfood sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $860, yields 300 gallons of plain yogurt. Naturalfood sells the one-gallon tubs for $6 each, and spends $0.14 for each plastic tub. Naturalfood has recently begun to reconsider its strategy. Naturalfood wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. Naturalfood could further process each batch of plain yogurt into 6,400 individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. Naturalfood would sell each individual portion for $0.50. Packaging would cost $0.08 per portion, and fruit would cost $0.11 per portion. Fixed costs would not change. Print Print Done Done Naturalfood processes organic milk into plain yogurt. (Click the icon to view additional information.) Should Naturalfood continue 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.) Process Costs Sell As Is Further Difference Expected revenue from selling by the gallon Expected revenue from selling individual portions Additional costs of selling as is by the gallon Additional costs of processing individual portions Total net revenue
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