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Business, 15.11.2019 07:31 bryce2892

(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 ($2.40 per pound) $ 2.40 less joint costs incurred up to the split-off point where t-bone steak can be identified as a separate product 1.35 profit per pound $ 1.05 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 $0.20 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 $3.60 per pound.

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