Question: Organic Plus processes organic milk into plain yogurt. Organic Plus sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch,

Organic Plus processes organic milk into plain yogurt. Organic Plus sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $830, yields 750 gallons of plain yogurt. Organic Plus sells the one-gallon tubs for $6.00 each and spends $0.10 for each plastic tub. Management has recently begun to reconsider its strategy. Organic Plus wonders if it would be more profitable to sell individual-sized portions of fruited organic yogurt at local food stores. Organic Plus 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. Organic Plus would sell each individual portion for $0.40. Packaging would cost $0.07 per portion, and fruit would cost $0.12 per portion. Fixed costs would not change. Should Organic Plus 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?

Step by Step Solution

3.41 Rating (157 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

The 8 3 0 spent processing milk into yogurt is irrelevant because it will be incur... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

1329-B-F-A-C-M(402).docx

120 KBs Word File

Students Have Also Explored These Related Financial Accounting Questions!