E8-51B. Sell as is or process further (Learning Objective 7)OrganicPlus processes organic milk into plain yogurt. OrganicPlus sellsplain yogurt to hospitals, nursing homes, and restaurants in bulk, one-gallon containers. Each batch, processed at a cost of $830, yields 750gallons of plain yogurt. OrganicPlus sells the one-gallon tubs for $6.00each and spends $0.10 for each plastic tub. Management has recentlybegun to reconsider its strategy. OrganicPlus wonders if it would bemore profitable to sell individual-sized portions of fruited organicyogurt at local food stores. OrganicPlus could further process each batchof plain yogurt into 16,000 individual portions (3/4 cup each) of fruitedyogurt. A recent market analysis indicates that demand for the productexists. OrganicPlus would sell each individual portion for $0.40.Packaging would cost $0.07 per portion, and fruit would cost $0.12 perportion. Fixed costs would not change. Should OrganicPlus continue tosell only the gallon-sized plain yogurt (sell as is) or convert the plainyogurt into individual-sized portions of fruited yogurt (process further)?Why?

Differential analysis: Differential analysis refers to the comparison of the differential cost that…

Answered: E8-51B. Sell as is or process further

Business

Accounting

E8-51B. Sell as is or process further

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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