Should the company sell the milk or process it further

Reference no: EM13903214

Sell or process further. Happy Cow Dairy operates a company that produces cheese from the milk that it purchases from dairy farmers. Management is considering whether to continue producing cheese or to sell the milk before it is processed into cheese. For a typical month, management figures the company could sell milk for $100,000, or it could process that milk further into cheese, which it could sell for $180,000. The differential costs of processing that milk into cheese are $70,000 for a typical month. In addition, the company has other costs that are the same whether it produces cheese or milk that amount to $20,000 in a typical month.

Assuming a typical month, should the company sell the milk or process it further?

Reference no: EM13903214

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