Question
Organicplus, processes organic milk into plain yogurt. Organicplus sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at
Organicplus, processes organic milk into plain yogurt. Organicplus sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $850, yields 570 gallons of plain yogurt. the company sells the one-gallon tubs for $8 each and spends $0.2 for each plastic tub. If instead they wanted to market to individuals, organicplus could further process each batch of plain yogurt into 12,160 individual portions (3/4 cup each) of fruited yogurt. Organicplus would sell each individual portion for $0.52. Packaging would cost $0.05 per portion, and fruit would cost $.12 per portion. Fixed costs would not change. How would processing further (selling fruited yogurt) affect net operating income compared to sell as is (plain yogurt)? Enter a positive number if NOI increases by processing further into fruited yogurt and a negative number if it decreases.
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