Shaw\'s Supermarket has on hand a large supply of T-bone steak, and its trying t

Question

Shaw's Supermarket has on hand a large supply of T-bone steak, and its trying to decide whether to sell the steak as is, or to process them further into filet mignon and NY cut steaks. If the T-bone is sold as is, a 1-pound (16 ounces) steak would sell for $4.50. Processing costs up to that sale point amounted to $3.60. If the one pound steak is further processed, it will yield one 6 oz filet and one 8 oz NY cut, and the remaining 2 oz are waste. The cost of processing the T-bone is $.50 per pound. Filet mignon can be sold for $8 per pound, and NY cut can be sold for $5.60 per pound.

A. If the t-bone is sold as is, what is the profit per pound?
B. Calculate the selling price of the filet, the NY cut, and the total revenue, assuming the T-bone steak is processed. Show calculations.
C. What is the added revenue from further processing (less the revenue from the one-pound T-bone?
D. What is the profit or loss per pound from further processing of one 16-oz t-bone steak?

Explanation / Answer

A. if the t-bone is sold as it is the profit per pound is sale price of t-bone per pound          $4.50 process cost till sale point                  $3.60 profit on sale                                     $0.90 B. if it is further processed cost of production one unit of t-bone         $3.60 Further processing charges                            $0.50 so the total cost of further process of one unit$4.10 per unit Filet magnon sale price is      $8 per pound cost price is                          $4.10 per pound profit on sale                         $3.90 per pound if it NY cut the sale price is $5.60 the cost of production is        $4.10 profit on sale                         $1.50 per pound C. Added revenue from further processing Due to the further processing Filet magnon an Ny cut will be produced so per unit sale of these are filet magnon is $8 per pound and Nycut sale price per unit is $5.60 so the total from these two is             $13.60 further processing cost    is                  $4.10 income per pound of further processing$9.50 per pound D. sale price of 16oz t bone steak is   $4.50 further processing cost is                     $4.10 profit is                                              $0.40

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