(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: Wholesale selling price ($5.00 per pound) Less joint costs incurred up to the split-off point where T-bone steak can be identified as a separate product Profit per pound 5.00 $ 4.10 0.90 $ 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 10-ounce New York cut; the remaining ounces are waste. The cost of processing the T-bone steaks into these cuts is $0.30 per pound. The filet mignon can be sold for $7.20 per pound, and the New York cut can be sold wholesale for $5.60 per pound.