(Solved): Cole Chemical has spent $242,000 to refine 72,000 gallons of acetone, which can be sold for $2.50 a ...

Cole Chemical has spent

to refine 72,000 gallons of acetone, which can be sold for

a gallon. Alternatively, Cole Chemical can process the acetone further. This processing will yield a total of 61,000 gallons of lacquer thinner that can be sold for

a gallon. The additional processing will cost

per gallon of lacquer thinner. To sell the lacquer thinner, Cole Chemical must pay shipping of

a gallon and administrative expenses of

a gallon on the thinner. Requirements Identify the sunk cost. Is the sunk cost relevant to Cole's decision? Why or why not? Should Cole sell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives Requirement 1. Identify the sunk cost. Is the sunk cost relevant to Cole'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. exceeds the Process Further amount.) Sell As is Process Further Difference Less:

Net benefit to operating income per batch Decision: