Question

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 $0.11 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 $3.80 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

Answer 1

Answer:

Following are the responses to the given choices:

Explanation:

Please find the complete question in the attached file.

Sales from more processing per 16-ounce T-bone:

The cost of a single fillet mignon:

$\to(6\times \frac{\ 12.00}{16})=\ 4.50$

The sales price for one New York cut:

$\to ( 8 \times \frac{\ 8.80}{16})=\ 4.40$

total revenue from any further production 8.90  

One T-bone steak generates less revenue 7.95  

incremental revenue through additional processing 0.95

lower cost of further production 0.55  

The financial benefit of additional processing  $0.40