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Smith Chemical has spent $243,000 to refine 72,000 gallons of acetone, which can be sold for $2.70 a gallon Alternatively, Smith Chemical can process the
Smith Chemical has spent $243,000 to refine 72,000 gallons of acetone, which can be sold for $2.70 a gallon Alternatively, Smith Chemical can process the acetone Requirements 1. Identify the sunk cost. Is the sunk cost relevant to Smith's decision? Why or why not? essing will yield a total of 59,000 gallons 2. Should Smith sell the acetone as is or pr ocess it into of lacquer thinner that can be sold for $3.10 a gallon. The additional processing will cost $0.45 per gallon of lacquer thinner. To sell the lacquer thinner, Smith Chemical must pay shipping of $0.20 a gallon and administrative expenses of $0.13 a gallon on the thinner. lacquer thinner? Show the expected net revenue difference between the two alternatives
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