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[Prepared from a situation suggested by Professor John W. Hardy.) Lone Star Meat Packers is a major processor of beef and other meat products. The company has a large amount of Tbone steak on hand, and it is trying to decide whether to sell the Tbone steaks as they are initially cut or to process them further into let mignon and the New York cut. If the T-bone steaks are sold as initially cut. the company gures that a 1-pound Tbone steak would yield the following profit: Selling price ($195 per pound) 5 7.95 Less joint costs incurred up to the splito'F'l= point where Tbone steak can be identified as a separate product 3.8% Profit per pound $ 4-15 If the company were to further process the Tbone steaks, then cutting one side of a Tbone steak provides the let mignon and cutting the other side provides the New York cut. One 'lounce Tbone steak cut in this way will yield one Bounce let mignon and one 8ounce New York cut; the remaining ounces are waste. it costs $0.55 to further process one Tbone steak into the filet mignon and New York cuts. The let mignon can be sold for $12.00 per pound, and the New York cut can be sold for $8.80 per pound. Required: 1. What is the nancial advantage [disadvantage] offurther processing one Tbone steak into let mignon and New York cut steaks? 2. Would you recommend that the Tbone steaks be sold as initially cut or processed further? Complete this question by entering your answers in the tabs below. Requiredl E Requiredz Would you recommend that the Tbone steaks be sold as initially out or processed further? OTbone steaks should be processed further. OTbone steaks should be sold as initially cut. Book Print References Explanation Per 16- Ounce T- Bone Sales from further processing: Sales price of one filet mignon (6 ounces * $12.03 per pound + 16 ounces per pound) $ 4.50 Sales price of one New York cut (8 ounces x $8.80 per pound - 16 ounces per pound) 4.40 Total revenue from further processing 8.90 Less sales revenue from one T-bone steak 7.95 Incremental revenue from further processing 0.95 Less cost of further processing 0.55 Financial advantage of further processing $ 0.40 2. The T-bone steaks should be processed further into the filet mignon and the New York cut. The $4.15 "profit" per pound shown above is not relevant to the decision because it contains allocated joint costs. The company will incur the joint costs regardless of whether the T-bone steaks are sold outright or processed further, thus, this cost should be ignored in the decision