has a large on meat products. The c as they are initialy cut or to process them

Question

has a large on meat products. The c as they are initialy cut or to process them further into filet mignon and the New York cut ir the T-bone steaks are sold as intially cut, the company figures that a 1-pound T-bone steak would yield the following profit s 2.40 Less joint costs incurred up to the split-off point where 1.65 s 0.75 Profit per pound 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 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 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 $3.60 per pound, and the New York cut can be sold for $3.50 per pound. 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 What is the ) of further processing one T-bone steak into filet mignon and New York cut ? (Do not round intermediate

Explanation / Answer

1 Revenue from further processing Selling price of one filet mignon (6*3.6/16) 1.35 Selling price of one cut (8*3.5/16) 1.75 Total revenue from further processing 3.1 Less: revenue from one T bone steak -2.4 Incremental revenue from further processing 0.7 Less cost of further processing -0.14 Profit per pound from further processing 0.56 2 Yes, T bone should be processed further,because there is an incremental profit of 0.56 per unit

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