= Homework: CHAPTER M-8 Question 5, PM8-32B (book/static) Part 3 of 4 HW Score: 45.63%, 2.28...
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= Homework: CHAPTER M-8 Question 5, PM8-32B (book/static) Part 3 of 4 HW Score: 45.63%, 2.28 of 5 points Points: 0.31 of 1 Save Elm Petroleum has spent $204,000 to refine 61,000 gallons of petroleum distillate, which can be sold for $6.30 per gallon. Alternatively, Elm can process the distillate further and produce 58,000 gallons of cleaner fluid. The additional processing will cost $1.80 per gallon of distillate. The cleaner fluid can be sold for $9.10 per gallon. To sell cleaner fluid, Elm must pay a sales commission of $0.10 per gallon and a transportation charge of $0.16 per gallon. Read the requirements. Joint costs of producing 61,000 gallons of 384,300 petroleum distillate (204,000) Cost of processing Revenues from further (124,880) processing further 527,800 Requirements 1. Fill in the diagram for Elm's alternatives. 2. Identify the sunk cost. Is the sunk cost relevant to Elm's decision? 3. Should Elm sell the petroleum distillate or process it into cleaner fluid? Show the expected net revenue difference between the two alternatives. Print Done Requirement 2. Identify the sunk cost. Is the sunk cost relevant to Elm's decision? The $204,000 spent to refine the petroleum distillate is a sunk cost that does not differ between the alternatives of selling as is or processing further. Consequently, this sunk cost is irrelevant to the sell-or-process-further decision. Requirement 3. Should Elm 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.) Expected revenue from selling 61,000 gallons of petroleum distillate Expected revenue from selling 58,000 gallons of cleaner fluid Additional costs of processing Total net revenue Help me solve this Etext pages Get more help Process Sell As Is Further Difference Clear all Check answer = Homework: CHAPTER M-8 Question 5, PM8-32B (book/static) Part 3 of 4 HW Score: 45.63%, 2.28 of 5 points Points: 0.31 of 1 Save Elm Petroleum has spent $204,000 to refine 61,000 gallons of petroleum distillate, which can be sold for $6.30 per gallon. Alternatively, Elm can process the distillate further and produce 58,000 gallons of cleaner fluid. The additional processing will cost $1.80 per gallon of distillate. The cleaner fluid can be sold for $9.10 per gallon. To sell cleaner fluid, Elm must pay a sales commission of $0.10 per gallon and a transportation charge of $0.16 per gallon. Read the requirements. Joint costs of producing 61,000 gallons of 384,300 petroleum distillate (204,000) Cost of processing Revenues from further (124,880) processing further 527,800 Requirements 1. Fill in the diagram for Elm's alternatives. 2. Identify the sunk cost. Is the sunk cost relevant to Elm's decision? 3. Should Elm sell the petroleum distillate or process it into cleaner fluid? Show the expected net revenue difference between the two alternatives. Print Done Requirement 2. Identify the sunk cost. Is the sunk cost relevant to Elm's decision? The $204,000 spent to refine the petroleum distillate is a sunk cost that does not differ between the alternatives of selling as is or processing further. Consequently, this sunk cost is irrelevant to the sell-or-process-further decision. Requirement 3. Should Elm 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.) Expected revenue from selling 61,000 gallons of petroleum distillate Expected revenue from selling 58,000 gallons of cleaner fluid Additional costs of processing Total net revenue Help me solve this Etext pages Get more help Process Sell As Is Further Difference Clear all Check answer
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