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What is the minimum price that will allow the dairy division

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Reference no: EM132410170

Question

The Dairy Division of Sheridan Company produces and sells milk to outside customers. The operation has the capacity to produce 200000 gallons of milk a year. Last year's operating results were as follows:

Sales (170000) gallons $646000

Variable costs 331500

Contribution margin 314500

Fixed costs 100000

Net Income $ 214500

Assume the Dairy Division is operating at capacity. If the Yogurt Division wants to purchase 20000 gallons of milk from the Dairy Division, what is the minimum price that will allow the Dairy Division to maintain its current net income?

Reference no: EM132410170

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