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M Marketing Final Pr Marketing Final pr x T Top Hat x G One of the primer Sign In-Affinity p M My UND 1 UND: U X E Connect × .> ? https://n t.html?isRegztrue&returnUr;?https%3A%2F%2fconnect.mh Findex.html%23%2Fregistration%2Fsi..? ? ? 0 Appssyllabus fine arts Ch. 12: Homework 6 Saved Help Save & Exit Submit 5 Check my work 1 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 initially cut or to process them further into filet mignon and the New York cut. points Skipped 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: eBook 5 2.20 1.25 $ 9.95 Selling price ($2.20 per pound) Less joint costs incurred up to the split-off point where Print T-bone steak can be identified as a separate product Profit per pound References 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 $3.60 per pound, and the New York cut can be sold for $3.80 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 Mc Graw

Explanation / Answer

Solution:(1): Calculation of profit per pound [showing Financial advantage(disadvantage) of further processing]:

Solution:(2): The T-bone steaks should be further processed into filet mignon and New York cut. This will yield $0.91 per pound in added profit for the company.

Particulars Amount ($) Sales from further processing: Sales price of one filet mignon (6 ounces×$3.6 per pound÷16 ounces per pound) 1.35 Sales price of one new york cut(8 ounces×$3.8 per pound÷16 ounces per pound) 1.9 Total revenue from further processing 3.25 Less: sales revenue from one T-bone steak 2.20 Incremental revenue from further processing 1.05 Less: Cost of further processing 0.14 Profit per pound from further processing $0.91

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