Cole Petroleum has spent $200,000 to refine 61,000 gallons of petroleum distillate, which can be sold for $6.40 per gallon. Alternatively, Cole can process the distillate further and produce 56,000 gallons of cleaner fluid. The additional processing will cost $1.75 per gallon of distillate. The cleaner fluid can be sold for $9.00 per gallon To sell cleaner fluid, Cole must pay a sales commission of $0.10 per gallon and a transportation charge of $0.15 per gallon. Read the fequirements Requirement 1. Fill in the diagram for Cole's alternatives. Revenues from selling as is Joint costs of producing 61,000 gallons of petroleum gallons of petroleum distillate Revenues from Cost of processing further processing further Requirement 2. Identify the sunk cost. Is the sunk cost relevant to Cole's decision? The is a sunk cost that Consequently, this sunk cost is to the sell-or-process-further decision. differ between the alternatives of selling as is or processing further. Requirement 3. Should Cole sell the petroleum distillate or process it into cleaner fluid? Show the expected net revenue difference between the two alternatives. (Enter decreases to profits with a parentheses or minus sign. For the difference in total net revenue, use a parentheses or a minus sign if processing further will decrease total net revenue.) Process Further Sell As Is Difference Expected revenue from selling 61,000 gallons of petroleum distillate Expected revenue from selling 56,000 gallons of cleaner fluid Additional costs of processing Total net revenue Decision: i Requirements - X 1. Fill in the diagram for Cole's alternatives. 2. Identify the sunk cost. Is the sunk cost relevant to Cole's decision? 3. Should Cole sell the petroleum distillate or process it into cleaner fluid? Show the expected net revenue difference between the two alternatives. Print Done