Should natural maid continue to sell only gallon-size plain

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Reference no: EM132480560

Making sell or process further decisions

Natural Maid processes organic milk into plain yogurt. Natural Maid sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $840, yields 300 gallons of plain yogurt. Natural Maid sells the one-gallon tubs for $5 each and spends $0.14 for each plastic tub. Natural- Maid has recently begun to reconsider its strategy. Natural Maid wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. Natural Maid could further process each batch of plain yogurt into 6,400 individual portions (3/4 cup each) of fruited yogurt. A recent market analysis indicates that demand for the product exists. Natural Maid would sell each individual portion for $0.58. Packaging would cost $0.10 per portion, and fruit would cost $0.11 per portion. Fixed costs would not change.

Question 1: Should Natural Maid 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?

Reference no: EM132480560

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