Question

Score: 0 of 1 pt 7 of 7 (5 complete) HW Score: 50%, 5 of 10 pts E8-31A (similar to) Question Help All Natural processes organic milk into plain yogurt. All Natural sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $830, yields 570 gallons of plain yogurt. The company sells the one-gallon tubs for $6.00 each and spends $0.10 for each plastic tub. All Natural 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. All Natural could further process each batch of plain yogurt into 12,160 individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. All Natural would sell each individual portion for $0.40. Packaging would cost $0.08 per portion, and fruit would cost $0.11 per portion. Fixed costs would not change. Should All Natural 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? 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 individual Sell as gallon-size containers portions Less: Net benefit per unit X х Net benefit per batch Choose from any list or enter any number in the input fields and then click Check Answer. ? part remaining Clear All Check Answer

Answer 1

	Gallon size	Individual Portions
Selling price per unit	6.00	0.40
Less: Packaging cost	0.10	0.08
Fruit cost	-	0.11
Net Benefit per unit	5.90	0.21
Number of units per batch	570.00	12,160.00
Net Benefit per batch	3,363.00	2,553.60
Should sell as is i.e. gallon sized plain yogurt since more profitable
Note: Processing cost of $830 is irrelevant as it has already been incurred