Prime Directive Packers is a beef processor. They have a large amount of T$-$bond steaks on$-$hand and need to decide whether to sell them as they are or to further process them into filet mignon and New York cut.

Selling the T$-$bone steaks as initially cut would yield following profit, based on a $1-$pound T$-$bone:

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Selling price $($$$8\mathrm{.}80/$lb$.)$ $$8\mathrm{.}80$

Less joint costs to process up to the split$-$off point where

they have an identifiable T$-$bone steak$1\mathrm{.}55$

$$Profit per pound$$ $$7\mathrm{.}25$

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Further processing will yield a $6-$ounce filet mignon, an $8-$ounce New York cut, and $2$ ounces of waste. It will cost an additional $$0\mathrm{.}12/$ lb$.$ to process the $1-$lb T$-$bone into the filet mignon and New York cuts. The filet mignon can be sold for $$14\mathrm{.}00/$ lb$.$ and the New York cut for $$9\mathrm{.}60/$lb$.$

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A$.$ What is the financial advantage $($disadvantage$)$ of further processing one T$-$bone steak into filet mignon and New York cut steaks? $6$ pts $$1\mathrm{.}13$

B$.$ Would you recommend the T$-$bone steaks be sold as$-$is or processed into filet mignon and New York Cut? $3$ pts$.$ I would recommend the steaks to be sold processed into filet mignon and New York Cut because they will make $$1\mathrm{.}13$ more per portion given than if they sold it as is

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PROBLEM $5.(18$ point$)$

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