Naturalmaid processes organic milk into plain yogurt.

$($Click the icon to view additional information.$)$

in parentheses in a sell or process further decision.$)$

More info

Naturalmaid sells plain yogurt to hospitals, nursing homes, and restaurants in bulk,

one$-$gallon containers. Each batch, processed at a cost of $$880,$ yields $600$ gallons of

plain yogurt. Naturalmaid sells the one$-$gallon tubs for $$9$ each, and spends $$0\mathrm{.}16$ for

each plastic tub. Naturalmaid has recently begun to reconsider its strategy.

Naturalmaid wonders if it would be more profitable to sell individual$-$size portions of

fruited organic yogurt at local food stores. Naturalmaid could further process each

batch of plain yogurt into $12,800$ individual portions $(\frac{3}{4}$ cup each$)$ of fruited yogurt. A

recent market analysis indicates that demand for the product exists. Naturalmaid

would sell each individual portion for $$0\mathrm{.}58.$ Packaging would cost $$0\mathrm{.}11$ per portion,

and fruit would cost $$0\mathrm{.}11$ per portion. Fixed costs would not change.

Decision: Based on this analysis, it is more profitable to sell