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?
Don't use plagiarized sources. Get Your Custom Essay on