Question

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: $ 2.40 Selling price ($2.40 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 1.25 $ 1.15 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 $0.18 to further process one T-bone steak into the filet mignon and New York cuts. The filet mignon can be sold for $4.00 per pound, and the New York cut can be sold for $3.00 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. Required 1 Required 2 What is the financial advantage (disadvantage) of further processing one T-bone steak into filet mignon and New York cut steaks? (Do not round intermediate calculations. Round your answer to 2 decimal places.) per unit

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer 2 3 In the given question we have to calculate the financial advantage/ (disadvantage) if we further process T bone Streak 5 Part 1) 6 Financial advantage/(disadvantage) Revenue from filet mignon+revenue from new york cut - revenue forgone additional processing cost 7 (4*6/16)+(3*8/16) -2.4-.18 8$0.42 Advantage 10 Thus the correct answer is 11 Financial Advantage S 0.42 Per Unit 12 13 14 Part 2) 15 Since there is financial advantage, T bone streak should be processed further. 16 17 Thank You 10