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Problem 12-20 Sell or Process Further Decision [L012-7 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 initialy cut or to process them further into flet 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 foilowing proft Sel1ing price (52.10 per pound) Less joint costs incurred up to the split-off point where s 2.10 7-bone steak can be identified as &separate product Protit per pound t 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 6ounce filet mignon and one 8-ounce New York cut, the remaining ounces are waste. It costs $012 to further process one T.bone steak into the filet mignon and New York cuts. The flet mignon can be sold for $3.60 per pound, and the New York cut can be sold for $360 per pound. 1, what is the francial advantage (dsedvantage) of further processing one T-bone steak into fiet mignon and New York cut steaks? 2. Would you recommend that the T-bone steaks be sold as initially cut or processed furtheri Complete this question by entering your answers in the tabs below. equireds Rqired 2 What is the firancial advantage (dsadvantage) of further processing one T-bone steak into filet mignon and New York 3 5 6 9

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