134AC × D Ch 12 2 Attempt y Tim McGraw- Live Like | ezto.rmheducation.com/hm.tpx

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134AC × D Ch 12 2 Attempt y Tim McGraw- Live Like | ezto.rmheducation.com/hm.tpx connect AccoUNTING Ch 12 2 Attempt Question 7 (of 7) 7. value 5.16 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: Selling price ($2.00 per pound) Less joint costs incurred up to the split-off point where $ 2.00 1.40 $ 0.60 T-bone steak can be identified as a separate product Profit per pound As mentioned above, instead of being sold as initially cut, the T-bone steaks could be further processed into filet mignon and New York cut 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 $0.19 per pound. The filet mignon can be sold for $3.60 per pound, and the New York cut can be sold for $3.30 per pound

Explanation / Answer

1) Determine profit per pound after further processing :

2) T bone steaks shold be processed further..

Part 16 ounces T Bone Sales from further processing Sales price on one filet mignon 3.60 Sales price of one new york cut 3.30 Total revenue from further processing 6.90 Less: Sales revenue from one T bond steak (2.00) Incremental revenue from further processing 4.90 Less: Cost of further processing (0.19) Profit (loss) Per pound from further processing 4.71

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