Problem 12-20 Sell or Process Further [LO12-7]

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 initially cut the company figures that a 1-pound T-bone steak would yield the following profit: As mentioned above, instead of being sold as initially cut the T-bone steaks could be further processed into filet Nixon and New York cut steaks. Cutting one side of a T-bone steak provides the filet Nixon. 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 Nixon and one 8-ounce New York cut; the remaining ounces are waste. The cost of processing the T-bone steaks into these cuts is $0.16 per pound. The filet Nixon can be sold for $4.00 per pound, and the New York cut can be sold for $3.70 per pound. Required: Determine the profit per pound from processing the T-bone steaks into filet Mignon and New York cut steaks. (Do not round intermediate calculations. Round your answers to 2 decimal Places.)