P26-5A Long Petroleum Company produces a variety of petroleum products. Assume that Long has spent $300,000 to refine 60.000 gallons of petroleum distillate. Suppose Long can sell the distillate for $5.50 a gallon. Alternatively, it can process the distillate further and pro- duce cleaner for tape heads. Assume that the additional processing will cost another $1.25 a gallon and that the cleaner can be sold for $7.50 a gallon. To make this sale. Long must pay a sales commission of $0.10 a gallon and a transportation charge of $0.15 a gallon. Required 1. Prepare a diagram of Long's alternatives, using Exhibit 26-10. page 1073, as a guide. 2. Identify the sunk cost. Is the sunk cost relevant to Long's decision? 3. Prepare an analysis to indicate whether Long should sell the distillate or process it into tape- head cleaner. Show the expected net revenue difference between the two alternatives. 4. Identify the opportunity cost of each option. Explain how managers can use opportunity cost to make this decision.