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Wholesome Dairy processes milk. The cost of the milk processing is $1,420,000. Wholesome is looking to increase its net income and is exploring the
Wholesome Dairy processes milk. The cost of the milk processing is $1,420,000. Wholesome is looking to increase its net income and is exploring the possibility of expanding its products to include cream and/or ice cream. It takes 2 gallons of milk to make a half gallon of ice cream. Product Selling Price Units Produced 852,000 gallons Additional Processing costs 2 $ 3.14 per gallon 6.32 per half gallon $0.37 per half gallon Milk Ice Cream Required: 1. How many half gallons of ice cream can Wholesome make? 2. What are the additional processing costs to convert the milk to ice cream? 3. Should Wholesome sell the milk or process it further and sell ice cream?
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