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(Prepared from a situation suggested by Professor John W. Hardy.) Granite City Meat Processing Corporation is a major processor of beef and other meat products.
(Prepared from a situation suggested by Professor John W. Hardy.) Granite City Meat Processing Corporation 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 is or to process them further into filet mignon and New York cut steaks. Management believes that a 1-pound T-bone steak would yield the following profit $1.90 Wholesale selling price ($1.90 per pound) Less joint costs incurred up to the split-off point where T-bone steak can be identified as a separate product 1.50 $0.40 Profit per pound As mentioned above, instead of being sold as is, the T-bone steaks could be further processed into filet mignon and New York cut steaks. 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 yield one 5-ounce filet mignon and one 9-ounce New York cut, the remaining ounces are waste. The cost of processing the T- bone steaks into these cuts is S0.21 per pound. The filet mignon can be sold for S3.20 per pound, and the New York cut can be sold wholesale for $2.40 per pound Required 1. Determine the profit per pound from processing the T-bone steaks further into filet mignon and New York cut steaks. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Profit per pound from further rocessing 2. Would you recommend that the T-bone steaks be sold as is or processed further? O T-bone steaks should be sold O T-bone steaks should be processed further
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