Dairyplus processes organic milk into plain yogurt. Dairyplus sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $830, yields 300 gallons of plain yogurt. Dairyplus sells the one-gallon tubs for $8 each, and spends $0.14 for each plastic tub. Dairyplus has recently begun to reconsider its strategy. Dairyplus wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. Dairyplus 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. Dairyplus would sell each individual portion for $0.58. Packaging would cost $0.05 per portion, and fruit would cost $0.09 per portion. Fixed costs would not change. Should Dairyplus 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 Enter any number in the edit fields and then click Check Answer. Finally, calculate the total net benefit per container.
Dairyplus processes organic milk into plain yogurt. Dairyplus sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $830, yields 300 gallons of plain yogurt. Dairyplus sells the one-gallon tubs for $8 each, and spends $0.14 for each plastic tub. Dairyplus has recently begun to reconsider its strategy. Dairyplus wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. Dairyplus 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. Dairyplus would sell each individual portion for $0.58. Packaging would cost $0.05 per portion, and fruit would cost $0.09 per portion. Fixed costs would not change. Should Dairyplus 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 Enter any number in the edit fields and then click Check Answer. Finally, calculate the total net benefit per container.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter12: Activity-based Management
Section: Chapter Questions
Problem 28P: Bienestar, Inc., has two plants that manufacture a line of wheelchairs. One is located in Kansas...
Related questions
Question
Dairyplus processes organic milk into plain yogurt.
Dairyplus sells plain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $830, yields 300 gallons of plain yogurt. Dairyplus sells the one-gallon tubs for $8 each, and spends $0.14 for each plastic tub. Dairyplus has recently begun to reconsider its strategy. Dairyplus wonders if it would be more profitable to sell individual-size portions of fruited organic yogurt at local food stores. Dairyplus 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. Dairyplus would sell each individual portion for $0.58. Packaging would cost $0.05 per portion, and fruit would cost $0.09 per portion. Fixed costs would not change.
Should Dairyplus 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
|
|
|
|
Enter any number in the edit fields and then click Check Answer.
Finally, calculate the total net benefit per container.
|
|
Process
|
|
Costs
|
Sell As Is
|
Further
|
Difference
|
Expected revenue from selling
|
|
||
Expected revenue from selling
|
|
||
Additional costs of selling as is
|
|
||
Additional costs of processing
|
|
||
Total net revenue
|
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Business Its Legal Ethical & Global Environment
Accounting
ISBN:
9781305224414
Author:
JENNINGS
Publisher:
Cengage
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Business Its Legal Ethical & Global Environment
Accounting
ISBN:
9781305224414
Author:
JENNINGS
Publisher:
Cengage