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please help solve this! this is all the info i was given Preston Chemical has spent $239,000 to refine 70,000 gallons of acetone, which can
please help solve this!
this is all the info i was given
Preston Chemical has spent $239,000 to refine 70,000 gallons of acetone, which can be sold for $2.40 a gallon. Alternatively, Preston Chemical can process the acetone further. This processing will yield a total of 58,000 gallons of lacquer thinner that can be sold for $3.30 a gallon. The additional processing will cost $0.75 per gallon of lacquer thinner. To sell the lacquer thinner, Preston Chemical must pay shipping of 50 21 a gallon and administrative expenses of $0.15 a gallon on the thinner, Requirements 1. Identify the sunk cost. Is the sunk cost relevant to Preston's decision? Why or why not? 2. Should Preston sell 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 Preston's decision? Why or why not? is a sunk cost differ between alternatives of selling as is or The that processing further. Consequently, this sunk cost of is to the sell or process further decision. Preston Chemical has spent $239,000 to refine Requirements 70,000 gallons of acetone, which can be sold for 1. Identify the sunk cost. Is the sunk cost relevant to $2.40 a gallon. Alternatively, Preston Chemical can Preston's decision? Why or why not? process the acetone further. This processing will yield 2. Should Preston sell the acetone as is or process it a total of 58,000 gallons of lacquer thinner that can be sold for $3.30 a gallon. The additional processing will into lacquer thinner? Show the expected net cost $0.75 per gallon of lacquer thinner. To sell the revenue difference between the two alternatives. lacquer thinner, Preston Chemical must pay shipping of $0 21 a gallon and administrative expenses of $0.15 a gallon on the thinner. further. Consequently, this sunk cost of Jis to the sell or process further decision. Requirement 2. Should Preston sell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives. (Enter a "o" for any zero amounts. Use a minus sign or parentheses in the Difference column if the Sell As is amount exceeds the Process Further amount.) Sell Process As Is Further Difference Less Net benefit to operating income per batch Decision Step by Step Solution
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