ezto.mheducation.com chapter 10 homework question 20.00 points Prepared from a s

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ezto.mheducation.com chapter 10 homework question 20.00 points 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 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: $220 1.70 $0.50 Selling price ($2 20 per pound) Less joint costs incurred up to the split-off point where T-bone steak can be identified as a separate product Profit per pound As mentioned above, instead of being sold as iniialy cut, the T-bone steaks could be further processed into filet mignon and New York aut steaks. 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. The cost of processing the T-bone steaks into these cuts is $0.14 per pound. The filet mignon can be sold for $4.40 per pound, and the New York cut can be sold for $3.10 per pound. 1. 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.) Sales from further processing: Sales price of one filet mignon s price of one New York cut Sale Total revenue from further processing Less sales revenue from one T-bone steak Incremental revenue from further processing Less cost of further processing Proftoss) per pound from further processing

Explanation / Answer

Per 16-Ounce T-Bone Sales from further processing: Sales price of one filet mignon 1.65 =4.4/16*6 Sales price of one New York cut 1.55 =3.1/16*8 Total revenue from further processing 3.2 Less sales revenue from one T-bone steak 2.2 Incremental revenue from further processing 1 Less cost of further processing 0.14 Profit per pound from further processing 0.86

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