Question

Organicfood processes organic milk into plain yogurt (Click the icon to view additional information.) Should Organicfood continue to sell only the gallon-size plain yogurt (sell as is) or convert the plain yogurt into individual-size portions of fruited yogurt (process further)? Why? (Use a minus sign or parentheses for amounts that are typically shown enclosed in parentheses in a sell or process further decision.) Process Costs Sell As is Further Difference Expected revenue from selling by the gallon Expected revenue from selling individual portions Additional costs of selling as is by the gallon Additional costs of processing individual portions Total net revenue Decision: Based on this analysis, it is more profitable to sell Enter any number in the edit fields and then continue to the next question More Info u food continue to sell only the gallon-size plain yogurt (sell as is) or convert the plain yogurt into dividual-size portions of fruited yogurt (process further)? Why? (Use a minus sign or parentheses for amounts that o typically i More Info Organicfood sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $820, yields 750 gallons of plain yogurt. Organicfood sells the one-gallon tubs for $6 each, and spends $0.12 for each plastic tub. Organicfood has recently begun to reconsider its strategy. Organicfood wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. Organicfood could further process each batch of plain yogurt into 16,000 individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. Organicfood would sell each individual portion for $0.62. Packaging would cost $0.05 per portion, and fruit would cost $0.15 per portion. Fixed costs would not change. Expected r Expected re Additional c dditional c Total net re Decision: Ba Print Done Enter any number in the edit fields and then continue to the next question.

Answer 1

Sell as is Process Further Difference Costs revenue from selling by the gallon Expected revenue from selling individual portions |Additional cost of selling as is by the gallon $6 $6 S0.62 $0.62 (SO.12) (S0.20) (S0.12) ($0.20) $0.42 $0.15) Additional cost of processing individual portions (S0.05 Total net revenue The net revenue is increased from $5.88 to $6.70 by doing |the further processing, hence, it is more profitable, if Yogurt is sold after procecssing as it can save S0.42. $5.88 $6.30