6. Cole Chemical has spent $243,000 to refine 74,000 gallons of acetone, which can be sold for $2.20 a gallon. Alternatively, Cole Chemical can process the acetone further. This processing will yield a total of 63,000 gallons of lacquer thinner that can be sold for $3.40 a gallon. The additional processing will cost $0.65 per gallon of lacquer thinner. To sell the lacquer thinner, Cole Chemical must pay shipping of $0 25 a gallon and administrative expenses of $0.10 a gallon on the thinner Requirements 1. Identify the sunk cost. Is the sunk cost relevant to Cole's decision? Why or why not? 2. Should Cole sell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives. Requirement 1. Identify the sunk cost. Is the sunk cost relevant to Cole's decision? Why or why not? is a sunk cost The (1) that (2) differ between alternatives of selling as is or processing further. Consequently, this sunk cost of (3) to the sell or process further decision, Requirement 2. Should Cole sell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives. (Enter a "0" for any zero amounts. Use a minus sign or parentheses in the Difference column if the Sell As is amount exceeds the Process Further amount.) Sell Process is As Is Further Difference (4) Less: (5) Net benefit to operating income per batch (3) irrelevant O relevant Decision (6) (1) (2) O amount spent to refine the acetone does cost of further processing does not (4) O Additional processing costs to convert lacquer thinner O Contribution margin Fixed expenses Sales revenue Sales revenue (6) 8 (5) O Additional processing costs to convert lacquer thinner Contribution margin Fixed expenses Sell acetone as is Process further into lacquer thinner