$($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{.}10$ per pound$)$

Less joint costs incurred up to the split$-$off point where T$-$bone steak

can be identified as a separate product $$1\mathrm{.}25$

Profit per pound $$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{.}16$ to further process one T$-$bone steak into the filet mignon and New York cuts.

The filet mignon can be sold for $$14\mathrm{.}00$ per pound, and the New York cut can be sold for

$$8\mathrm{.}95$ 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.

Required $1$

What is the financial advantage $($disadvantage$)$ of further processing one T$-$bone steak into filet $r$

steaks?

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