Smith Chemical has spent $244,000 to refine 70,000 Requirements gallons of acetone, which can be sold for $2.00 a gallon. 1. Identify the sunk cost. Is the sunk cost relevant to Alternatively, Smith Chemical can process the acetone Smith's decision? Why or why not? further. This processing will yield a total of 64,000 gallons of lacquer thinner that can be sold for $3.30 a gallon. The 2. Should Smith sell the acetone as is or process it into lacquer thinner? Show the expected net revenue additional processing will cost $0.45 per gallon of lacquer thinner. To sell the lacquer thinner, Smith Chemical must difference between the two alternatives. pay shipping of $0.25 a gallon and administrative expenses of $0.13 a gallon on the thinner. Requirement 1. Identify the sunk cost. Is the sunk cost relevant to Smith's decision? Why or why not? is a sunk cost The differ between alternatives of selling as is or processing further. Consequently, this sunk cost of $ is to the sell or process further decision. that