1. The Lone Star Meat Packers' financial advantage of further processing one T-bone steak into Filet Mignon and New York cut steaks is $0.41 per pound.
Data and Calculations:
Selling price per pound of T-bone steaks = $2.40
Split-off costs = $1.60
Profit per pound =$0.80 ($2.40 - $1.60)
6-ounce filet mignon = 0.375 pounds (6/16)
8-ounce New York cut = 0.5 pounds (8/16)
Further processing costs = $0.19
New sales prices after further processing:
Filet Mignon = $1.35 ($3.60 x 0.375)
New York cuts = $1.65 ($3.30 x 0.5)
Total price per pound = $3.00
Total cost after further processing = $1.79 ($1.60 + $0.19)
Profit per pound after further processing = $1.21 ($3.00 - $1.79)
Financial advantage from further processing = $0.41 ($1.21 - $0.80)
Thus, the financial advantage of further processing one T-bone steak into Filet Mignon and New York cut steaks is $0.41 per pound.
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