$($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 per pound$)$

Less joint costs incurred up to the split$-$off point where T$-$bone $$8\mathrm{.}20$

steak can be identified as a separate product

Profit per pound

$1\mathrm{.}35$

$6\mathrm{.}85$

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 $$0\mathrm{.}12$ to further process one T$-$bone steak into the filet mignon and New York cuts. The filet mignon can be sold for $$12\mathrm{.}00$ per pound, and the New York cut can be sold for $$9\mathrm{.}05$ 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?

Complete this question by entering your answers in the tabs below.

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

Note: Do not round intermediate calculations. Round your answers to $2$ decimal places.

Financial advantage per unit