Lone Star Meat Packers is a major processor of beef and other meat products. The company has a large amount of T-bone steak on hand and it is trying to decide whether to sell the T-bone steaks as they are initially cut or to process them further into filet mignon.

I. Selling price of T-bone steak

II. Variable costs of processing T-bone steak into filet mignon.

III.The avoidable fixed costs of processing T-bone steak into filet mignon.

IV. The selling price of filet mignon.

V. The joint cost of the process from which T-bone steak is produced.

Which of the above item(s) is (are) relevant in a decision of whether to sell the T-bone steak as is or process it further into filet mignon?

Possible Answers...

III and V

I, II, III, and IV.

II and V.

V.