$($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 T$-$bone steak on hand and is deciding whether to sell the T$-$bone steaks as they are initially cut or process them further into filet mignon and the New York cut.

If the T$-$bone steaks are sold as initially cut, the company figures a $1-$pound T$-$bone steak yields the following profit:

Selling price $($$$8\mathrm{.}65$ per pound$)$ $ $8\mathrm{.}65$

Less joint costs incurred up to the split$-$off point where T$-$bone steak can be identified as a separate product $1\mathrm{.}40$

Profit per pound $ $7\mathrm{.}25$

If the company further processes the T$-$bone steaks, then one $16-$ounce T$-$bone steak will yield one $6-$ounce filet mignon, one $8-$ounce New York cut, and two ounces of waste. It costs $$0\mathrm{.}20$ to further process one T$-$bone steak into the filet mignon and New York cuts. The filet mignon can be sold for $$12\mathrm{.}00$ per pound, and the New York cut can be sold for $$9\mathrm{.}50$ per pound.

Required:

What is the financial advantage $($disadvantage$)$ of further processing one T$-$bone steak into filet mignon and New York cut steaks?

Would you recommend the T$-$bone steaks be sold as initially cut or processed further?