Chipper Cow Dairy Inc. produces milk at a total cost of $75000. The production generates 55000 gallons of organic milk which can be sold for $2 per gallon to a pasteurization company or the milk can be processed further into ice cream and then sold for $4.50 per gallon. It costs $92000 more to turn the annual milk supply into ice cream.
Instructions
If Chipper Cow processes the milk into ice cream how much is the incremental profit or loss? Should Chipper Cow process the milk into ice cream or sell it as is?

Question

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The Answer of Chipper Cow Dairy Inc. produces milk at a total cost of $75000. The production generates 55000 gallons of organic milk which can be sold for $2 per gallon to a pasteurization company or the milk can be processed further into ice cream and then sold for $4.50 per gallon. It costs $92000 more to turn the annual milk supply into ice cream.
Instructions
If Chipper Cow processes the milk into ice cream how much is the incremental profit or loss? Should Chipper Cow process the milk into ice cream or sell it as is?