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The poorly written numbers are 61,000 and 55000 Rouse Petroleum has spent $203,000 to refine 61,000 gallons of petroleum distillate, which can be sold for
The poorly written numbers are 61,000 and 55000
Rouse Petroleum has spent $203,000 to refine 61,000 gallons of petroleum distillate, which can be sold for $6.00 per gallon. Alternatively, Rouse can process the distillate further and produce 55,000 gallons of cleaner fluid. The additional processing will cost $1.90 per gallon of distillate. The cleaner fluid can be sold for $9.30 per gallon. To sell cleaner fluid, Rouse must pay a sales commission of $0.10 per gallon and a transportation charge of $0.19 per gallon. Read the requirements. Requirement 1. Fill in the diagram for Rouse's alternatives. Revenues from selling as is Joint costs i Requirements of producing 61,000 gallons of petroleum 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. distillate Cost of Revenues from processing processing further further Print Done $ Requirement 2. Identify the sunk cost. Is the sunk cost relevant to Root's decision? The is a sunk cost that differ between the alternatives of selling as is or processing further. Consequently, this sunk cost is to the sell-or-process-further decision. Click to select your answer(s) irrelevant eck Answer. relevant 2 parts Clear All Check Ansi Requirement 2. Identify the sunk cost. Is the sunk cost relevant to Root's decision? The is a sunk cost that differ between the alternatives of selling as is or processing further. Cons SS-further decision. $ cost of further processing Click spent to refine the petroleum distillate Requirement 3. Should Root sell the petroleum distillate or process it into cleaner fluid? Show the expected net revenue difference between the two alternatives. (For the difference in total net revenue, use a parentheses or a minus sign if processing further will decrease total net revenue.) Process Sell As Is Further Difference Expected revenue from selling 6100 gallons of petroleum distillate Expected revenue from selling 55000 gallons of cleaner fluid Additional costs of processing Total net revenue Decision: Click to se Process further into cleaner All parts s Sell as is
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