$($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 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 and the New York cut.

If the T$-$bone steaks are sold as Inltially cut, the company figures that a $1-$pound T$-$bone steak would yleld the following profit:

If the company were to further process the T$-$bone steaks, then cutting one side of a T$-$bone steak provides the filet mignon and

cutting the other side provides the New York cut. One $16-$ounce T$-$bone steak cut in this way will yleld one $6-$ounce filet mignon and

one $8-$ounce New York cut; the remalning ounces are waste. It costs $$0\mathrm{.}13$ to further process one $T-$bone steak Into the filet mignon

and New York cuts. The filet mignon can be sold for $$3\mathrm{.}60$ per pound, and the New York cut can be sold for $$3\mathrm{.}20$ per pound.

Required:

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

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