Cole Petroleum has spent $201,000 to refine 63,000 gallons of petroleum distillate, which can be sold for $6.10 per gallon. Alternatively, Cole can process the distillate further and produce 53,000 gallons of cleaner fluid. The additional processing will cost $1.75 per gallon of distillate. The cleaner fluid can be sold for $9.20 per gallon. To sell cleaner fluid, Cole must pay a sales commission of $0.12 per gallon and a transportation charge of $0.17 per gallon. Read the requirements. Requirement 1. Fill in the diagram for Cole's alternatives. $ gallons of ... Cost of processing further Joint costs of producing 63,000 petroleum Decision: distillate The sunk cost is Revenues from selling as is Revenues from Requirement 2. Identify the sunk cost. Is the sunk cost relevant to Cole's decision? is a sunk cost that to the sell-or-process-further decision. 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. (For the difference in total net revenue, use a parentheses or a minus sign if processing further will decrease total net revenue.) D Expected revenue from selling 63,000 gallons of petroleum distillate Expected revenue from selling 53,000 gallons of cleaner fluid Additional costs of processing Total net revenue differ between the alternatives of selling as is or processing further. Consequently, this Sell As Is Process Further Difference

Cole Petroleum has $pent$201,000 to refine 63,000 gallons of petroleum distillato, which can be sold for $6,10 per gallon. Alternatively, Colie can process the distiliate further and produce 53,000 gallons of cleaner fluid. The additional processing will cost $1.75 per gallon of distillate. The cleaner fluid can be sold for $9.20 per gallon. To sell cleaner fluid, Cole must pay a sales commission of 50.12 per gallon and a transportation charge of 50.17 per gallon Read the cequirements Requirement 2. Identify the sunk cost is the sunk cost relevant to Cole's decision? The is a sunk cost that sunk cost is to the soll-or-process-further decision differ between the atternatives of selling as is of processing further. Consequently, this Requirement 3. Should Cole sell the petroleum dissilate or process it into cleaner fluder Show the expocted net revenue difference between the two alternatives (For the difference in total notrevenue, use a parentheses or a minus sign if processing furthor will decrease fotal net revenue ) Process Expected revenue forn seling 63,000 galsons of petroinum distlate Expected revenue from selling 53,000 gatlons of cheaner Auid Additional costs of processing Total net revenus Decision