Lone star meat

Problem 11-20 Sell or Process Further Decision [LO11-71 Prepared from a situation suggested by Professor John W. Hardy) Lone Star Meat Packers ts a major processor of beef and other meat products. The company has a large amount of T-bone steak on hand, and t is trying to decide whether to sel the T bone steaks as they are initially cut or to process them further into filet mignon and the New York cut If the T-bone steaks are sold as initially cut, the comparny figures that a 1-pound T-bone steak would yield the following profit s 7.95 Selling price ($7.95 per pound) Less joint costs incurred up to the split-off point where T-bone steak can be identifled as a separate product Profit per pound 3.8 s 4.15 process the T-bone steaks, then cutting one side of a T-bone steek provides the filet mignon and If the cutting the other side provides the New York cut One 16-ounce T-bone steak cut in this way will yield one 6-ounce filet mignon and and New York cuts. The filet mignon can be sold for $12.00 per pound, and the New York cut con be sold for $8.80 per pound Required: 1. What is the financial advantage (disadvantage) of further processing one T-bone steak into filet mignon and New York cut steaks? e New York cut, the remaining ounces are waste. It costs $0.55 to further process one T-bone steak into the flet mignor 2 Would you recommend that the T-bone steoks be sold as initially cut or processed further? Complete this question by entering your answers in the tabs below. Required 1 Required 2