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Rouse Petroleum has spent $205,000 to refine 60,000 gallons of petroleum distillate, which can be sold for $6.30 per gallon. Alternatively, Rouse can process the
Rouse Petroleum has spent $205,000 to refine 60,000 gallons of petroleum distillate, which can be sold for $6.30 per gallon. Alternatively, Rouse can process the distillate further and produce 56,000 gallons of cleaner fluid. The additional processing will cost $1.75 per gallon of distillate. The cleaner fluid can be sold for $9.10 per gallon. To sell cleaner fluid, Rouse must pay a sales commission of $0.11 per gallon and a transportation charge of $0.18 per gallon. Read the requirements Requirement 1. Fill in the diagram for Rouse's alternatives. Requirements - X Revenues from selling as is Joint costs of producing 60.000 1. Fill in the diagram for Rouse's alternatives. 2. Identify the sunk cost. Is the sunk cost relevant to Rouse's decision? 3. Should Rouse sell the petroleum distillate or process it into cleaner fluid? Show the expected net revenue difference between the two alternatives. Print Done gallons of petroleum distillate Cost of processing Revenues from processing Enter any number in the edit fields and then click Check Answer. 3 parts Clear All remaining Check Answer Revenues from selling as is Joint costs of producing 60,000 gallons of petroleum distillate Cost of processing further Revenues from processing further
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