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Organicfood processes organic milk into plain yogurt. Organicfood sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at
Organicfood processes organic milk into plain yogurt. Organicfood sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $870, yields 450 gallons of plain yogurt. Organicfood sells the one-gallon tubs for $6 each, and spends $0.22 for each plastic tub. Organicfood has recently begun to reconsider its strategy. Organicfood wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores Organicfood could further process each batch of plain yogurt into 9.600 individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. Organicfood would sell each individual portion for $0.62. Packaging would cost $0.11 per portion, and fruit would cost $0.13 per portion. Fixed costs would not change. Should Organicfood 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.) Decision: Based on this analysis, it is more profitable to sell
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