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Preston Chemical has spent $238,000 to refine 70,000 gallons of acetone, which can be sold for $2.30 a gallon Alternatively, Preston Chemical can process the acetone further. This processing will yield a total of 62,000 gallons of lacquer thinner that can be sold for $3.10 a gallon. The additional processing will cost $0.50 per gallon of lacquer thinner. To sell the lacquer thinner, Preston Chemical must pay shipping of $0.20 a gallon and administrative expenses of $0.13 a gallon on the thinner. Requirements 1. Identify the sunk cost. Is the sunk cost relevant to Preston's decision? Why or why not? 2. Should Preston 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 Preston's decision? Why or why not? t The is a sunk cost that differ between alternatives of selling as is or processing marin further. Consequently, this sunk cost of is to the sell or process further decision. Requirement 2. Should Preston sell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives Librai (Enter a "0" for any zero amounts. Use a minus sign or parentheses in the Difference column if the Sell As is amount exceeds the Process Further amount) Sell Process ource As Is Further Difference undy Choose from any list or enter any number in the input fields and then continue to the next question ation T . Copy EUR

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