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McKnight Chemical has spent $243,000 to refine 73,000 gallons of acetone, which can be sold for 52.70 a gallon. Alternatively, Mcknight Chemical can process the

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McKnight Chemical has spent $243,000 to refine 73,000 gallons of acetone, which can be sold for 52.70 a gallon. Alternatively, Mcknight Chemical can process the acetone further. This processing will yield a total of 60,000 gallons of lacquer thinner that can be sold for $3.00 a gallon The additional processing will Cost 50.65 per gallon of lacquer thinner. To sell the lacquer thinner, McKnight Chemical must pay shipping of 80 25 a gallon and administrative expenses of $0.11 a gallon on the thinner Requirements 1. Identify the sunk cost. Is the sunk cost relevant to McKnight's decision? Why or why not? 2. Should Mcknight soll the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives. Requirement 1. Identify the sunk cost. Is the sunk cost relevant to McKnight's decision? Why or why not? is a sunk cost that The further. Consequently, this sunk cost of differ between alternatives of selling as is or processing to the sell or process further decision is

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