Chemical has spent

$ 238 comma 000$238,000

to refine

72,000

Requirement 1. Identify the sunk cost. Is the sunk cost relevant to

StenbackStenback's

decision? Why or why not?

The		is a sunk cost that					differ between alternatives of selling as is or processing
further. Consequently, this sunk cost of $			is			to the sell or process further decision.

Requirement 2. Should

StenbackStenback

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
			As Is	Further			Difference
Less:
Net benefit to operating income per batch

Decision:

Process further into lacquer thinner.

Sell acetone as is.

Choose from any list or enter any number in the input fields and then continue to the next question.

gallons of acetone, which can be sold for

$ 1.90$1.90

a gallon. Alternatively,

StenbackStenback

Chemical can process the acetone further. This processing will yield a total of

62 comma 00062,000

gallons of lacquer thinner that can be sold for

$ 3.10$3.10

a gallon. The additional processing will cost

$ 0.80$0.80

per gallon of lacquer thinner. To sell the lacquer thinner,

StenbackStenback

Chemical must pay shipping of

$ 0.18$0.18

a gallon and administrative expenses of

$ 0.15$0.15

a gallon on the thinner.

Requirements

1.

Identify the sunk cost. Is the sunk cost relevant to StenbackStenback's decision? Why or why not?

2.

Should StenbackStenback sell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives. StenbackStenback Chemical has spent $ 238 comma 000$238,000 to refine 72 comma 00072,000 gallons of acetone, which can be sold for $ 1.90$1.90 a gallon. Alternatively, StenbackStenback Chemical can process the acetone further. This processing will yield a total of 62 comma 00062,000 gallons of lacquer thinner that can be sold for $ 3.10$3.10 a gallon. The additional processing will cost $ 0.80$0.80 per gallon of lacquer thinner. To sell the lacquer thinner, StenbackStenback Chemical must pay shipping of $ 0.18$0.18 a gallon and administrative expenses of $ 0.15$0.15 a gallon on the thinner.