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

$810,

yields

525

gallons of plain yogurt. The company sells the one-gallon tubs for

$6.00

each and spends

$0.12

for each plastic tub.

Organicplus

has recently begun to reconsider its strategy. Management wonders if it would be more profitable to sell individual-sized portions of fruited organic yogurt at local food stores.

Organicplus

could further process each batch of plain yogurt into

11,200

individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists.

Organicplus

would sell each individual portion for

$0.50.

Packaging would cost

$0.07

per portion, and fruit would cost

$0.11

per portion. Fixed costs would not change. Should

Organicplus

continue to sell only the gallon-sized plain yogurt (sell as is) or convert the plain yogurt into individual-sized portions of fruited yogurt (process further)? Why?

Question content area bottom

Part 1

Calculate the net benefit per batch under each alternative. (Enter a "0" for any zero amounts. Round the net benefit per batch to the nearest whole dollar.)

		Sell as gallon-size		Sell as individual
		containers		portions
Less:
Net benefit per unit
Net benefit per batch