gallon of distillate. The cleaner fluid can be sold for $$9\mathrm{.}30$ per gallon. To sell cleaner fluid, Preston must pay a sales commission of $$0\mathrm{.}12$ per gallon and a transportation charge of $$0\mathrm{.}18$ per gallon

Read the requirements.

Kequirement $1.$ Fill in the diagram for Preston's alternatives.

Requirements

Fill in the diagram for Preston's alternatives.

Identify the sunk cost. Is the sunk cost relevant to Preston's decision?

Should Preston sell the petroleum distillate or process it into cleaner fluid? Show the expected net revenue difference between the two alternatives.

Requirement $2.$ Identify the sunk cost. Is the sunk cost relevant to Preston's decision? total net revenue.$)$

Expected revenue from selling $60,000$ gallons of petroleum distillate

Expected revenue from selling $57,000$ gallons of cleaner fluid

Additional costs of processing

Total net revenue

Decision: Process further into cleaner