Homework Answers
| 1) Computatio of Quantty of Half Gallon icecream | |
| Milk Produced Unit | 750000 |
| Milk Required to produced half gallon of Icecream | 2 Gallon |
| No. of Half gallon of Ice Cream can be produced (750000/2) | $375,000.00 |
| Part-2 | |
| Additional processing Cost to Convert Milk to icecream | 0.20 per Half Gallon |
| No. of Half gallon of Ice Cream can be produced | $375,000.00 |
|
Total Additional Cost to convert milk
to Incecream (375000*0.20) |
$75,000.00 |
| Part-3 | |
|
Revenue from Sale of Icecream ( 5.99X375000) |
$2,246,250.00 |
| Additional Cost to Convert milk to icecream | $75,000.00 |
| NRV of selling Icecream (a) | $2,171,250.00 |
|
Revenue from Sale of Milk without
processing (750000*2.97) (b) |
$2,227,500.00 |
| Differential (a-b) | -$56,250.00 |
It should not sell milk by further processing in icecream .
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