P26-5B Cisco Chemical Corporation has spent $320,000 to refine 84.000 gallons of acetone. which can be sold for $3.32 a gallon. Alternatively, Cisco can process the acetone further and produce 77,000 gallons of lacquer thinner that can be sold for $4.80 a gallon. The additional processing will cost $0.89 per gallon of lacquer thinner. To sell the lacquer thinner, Cisco must pay a transportation charge of $0.34 a gallon and administrative expenses of $0.16 a gallon. Required 1. Prepare a diagram of Cisco's decision. using Exhibit 26-10 (page 1073) as a guide. 2. Identify the sunk cost. Is the sunk cost relevant to Cisco's decision? 3. Prepare an analysis to indicate whether Cisco should sell the acetone or process it into lacquer thinner. Show the expected net revenue difference between the two alternatives. 4. Identify the opportunity cost of each alternative. Explain how managers use the notion of opportunity cost in making their decision.