Ahmad Beef Products, Inc

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Ahmad Beef Products, Inc., process cattle. It can sell meat as sides of beef or process it further into final cuts (steaks, roasts, and hamburger). As part of the company's strategic plan, management is looking for new markets for meat or meat by-products. The production process currently separates hides and bones for sale to other manufacturers. However, management is considering whether it would be profitable to process the hides into leather and the bones into fertilizer. The costs of the cattle and of transporting, hanging, storing, and cutting sides of beef are $125,000. The company's accountant provided these data: Sales Revenue Sales Revenue Additional if Sold at if Sold After Processing Costs Product Split-Off Further Processing Meat $100,000 $200,000 $80,000 Bones 20,000 40,000 15,000 Hides 50,000 55,000 10,000 Instructions: Should the products be processed further? Explain your answer. (show your calculation)