Problem 11-20 Sell or Process Further Decision [LO11-7) (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. of the T-bone steaks are sold as initially cut the company figures that a 1-pound T-bone steak would yield the following profit $.2.20 Selling price ($2.20 per pound) Les joint costa incurred up to the split-off point where T-bane steak can be identified as a separate product Profit per pound 1.20 $1.00 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 yield one 6-ounce filet mignon and one 8 ounce New York cut, the remaining ounces are waste. It costs $0.14 to further process one T-bone steak into the filet mignon and New York cuts. The filet mignon can be sold for $4.00 per pound, and the New York cut can be sold for $3.60 per pound Required: 1. What is the financial advantage (disadvantage) of further processing one T-bone steak into filet mignon and New York cut steaks? 2. Would you recommend that the T-bone steaks be sold as initially cut or processed further? one 8-ounce New York cut, the remaining ounces are waste. It costs $0.14 to further process one I-bone steak into the tilet mignon and New York cuts. The filet mignon can be sold for $4.00 per pound, and the New York cut can be sold for $3.60 per pound Required: 1. What is the financial advantage (disadvantage) of further processing one T-bone steak into filet mignon and New York cut steaks? 2 Would you recommend that 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 Required 2 What is the financial advantage (disadvantage) of further processing one. T-bone steak into filet mignon and New York cut steaks? (Do not round intermediate calculations. Round your answer to 2 decimal places.) per unit Required 2 > TUIN LUY DE TOG Ourices are waste. It costs $0.14 to further process one I-bone stea and New York cuts. The filet mignon can be sold for $4.00 per pound, and the New York cut can be sold for $ Required: 1 What is the financial advantage (disadvantage) of further processing one T-bone steak into filet mignon and 2. Would you recommend that 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 Red pred 2 Would you recommend that the T-bone steaks be sold as initially cut or processed further? T-bone steaks should be processed further. T-bone steaks should be sold as initially cut.
