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Rouse Chemical has spent $240,000 to refine 71,000 gallons of acetone, which can be soid for $2.20 a gallon. Alternatively, Rouse Chemical can process the

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Rouse Chemical has spent $240,000 to refine 71,000 gallons of acetone, which can be soid for $2.20 a gallon. Alternatively, Rouse Chemical can process the acetone further. This processing will yield a total of 59,000 gallons of lacquer thinner that can bo sold for $3.40 a gallon. The additional processing will cost $0.50 per gallon of lacquer thinner, To sell the lacquer thinner, Rouse Chemical must pay shipping of $0.20 a gallon and administrative expenses of $0.14 a gallon on the thinner. Requirements 1. Identify the sunk cost. Is the sunk cost refevant fo Rouse's decision? Why or why not? 2. Should Rouse sell the acetone as is or process it into lacquar thirner? Show the expected net revenue difference between the two aiferratives. Requirement 1. Identify the sunk cost. Is the sunk cost relevant to Rouse's decision? Why or why not? The is a sunk cost that difler between altematives of selling as is or processing further. Consequenty, this sunk cost of is to the sell or process further decision. Requirement 2. Should Rouse sell the acetone as is or process in into lacquer thinner? Show the expectod net rovenue diterence between the two atematives. (Entar a "0" 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.) Requirement 1. Identily the sunk cost. Is the sunk cost relevant to Rouse's decision? Why or why not? The is a sunk cost that differ between alternatives of selling as is or processing further. Consequently, this sunk cost of is to the sell or process further decision. Requirement 2. Should Rouse sell the acetone as is or process it into lacquer thinner? Show the expectod not revenue difference between the fwo aifematives. (Eintar a " 0 " for any zero amounts. Use a minus sign or parentheses in the Diflerence column if the Sell As is amount exceeds the Process Further amount.)

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