Question

Options sell fruited youghurt as individual portions or plain yourgurt in bulk 4 L container as long as there is demand for individual portion or the demand continues for bulk 4 L

Dairymaid processes organic milk into plain yogurt. Dairymaid sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, 4-L containers. Each batch, processed at a cost of $820, yields 2,000 (500 4-L containers) of plain yogurt. Dairymaid sells the 4-L tubs for $5.00 each and spends $0.16 for each plastic tub. Dairymaid has recently begun to reconsider its strategy. Dairymaid wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. Dairymaid could further process each batch of plain yogurt into 10,526 individual portions (190 mL each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. Dairymaid would sell each individual portion for $0.46. Packaging would cost 50.05 per portion, and fruit would cost $0.09 per portion. Fixed costs would not change. Should Dairymaid continue to sell only the 4-L tubs of plain yogurt (sell as-is) or convert the plain yogurt into individual-sized portions of fruited yogurt (process further)? Why? Calculate the net benefit per batch under each alternative. (If any of the values are zero, leave the cells blank. Round the net benefit per batch to the nearest whole dollar.) Sell as 4-L size containers Sell as individual portions Less: Net benefit per unit Net benefit per batch Based on this analysis, it is more profitable to sell as long as

I inserted this 2nd table just to help further

Answer 1

	Sell as 4 - L size	sell as individual portion
Sales revenue per unit	$5.00	$0.46
Less: Additional processing costs per unit-packaging	(0.16)	(0.05)
Less: Additional processing costs per unit-adding fruit	(0.00)	(0.09)
Net benefit per unit	$4.84	$0.32
No. Of units produced per batch	×2000	×10526
Net benefit per batch	$9680	$3368

Based on this analysis, it is profitable to sell  plain yourgurt in bulk 4 L container as long as the demand continues for bulk 4 L