PostPost Chemical has spent $ $242$ comma $000$$$242,000$ to refine $79$ comma $00079,000$ L of$$ acetone, which can be sold for $ $2\mathrm{.}30$$$2\mathrm{.}30/$L$.$Alternatively$,$ PostPost Chemical can process the acetone further to yield a total of $60$ comma $00060,000$ L of lacquer thinner that can be sold for $ $3\mathrm{.}50$$$3\mathrm{.}50/$L$.$ The additional processing will cost $ $0\mathrm{.}55$$$0\mathrm{.}55/$L of lacquer thinner.thinner. To sell the lacquer$$ thinner, PostPost Chemical must pay shipping of $ $0\mathrm{.}23$$$0\mathrm{.}23/$L and administrative expenses of $ $0\mathrm{.}15$$$0\mathrm{.}15/$L on the thinner.

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Question content area top right

Part $1$

Requirements

$1.$

Fill in the diagram for PostPost$\text{'}$s decision.

$2.$

Identify the sunk cost. Is the sunk cost relevant to PostPost$\text{'}$s $$decision$?$ Why or why$$ not?

$3.$

Should PostPost sell the acetone or process it into lacquer$$ thinner? Show the expected net revenue difference between the two alternatives.

Question content area bottom

Part $1$

Requirement $1.$ Fill in the diagram for PostPost$\text{'}$s decision.

Sell As Is

$

Acetone sales revenue

$

Sunk cost of producing $79,000$ L of acetone

$

Process

Cost of further processing

Further

$

Lacquer thinner sales revenue

Part $2$

Requirement $2.$ Identify the sunk cost. Is the sunk cost relevant to PostPost$\text{'}$s $$decision$?$ Why or why$$ not?

The $$$enter your response here

$$

cost of further processing

spent to refine the acetone

is a sunk cost that

$$

differs

does not differ

between the alternatives of selling as is or processing further.$$ Consequently, this sunk cost is

$$

irrelevant

relevant

to the$$ sell$-$or$-$process$-$further decision.

Part $3$

Requirement $3.$ Should PostPost sell the acetone or process it into lacquer$$ thinner? Show the expected net revenue difference between the two alternatives.

Calculate the expected net revenue difference between the two alternatives. $($Leave any unused cells$$ blank.$)$

Post Chemical

Sell As Is or Process Further Analysis

Sell As Is

Process Further

Revenue from selling $79,000$ L of acetone

Revenue from selling $60,000$ L of lacquer thinner

Additional costs required to convert acetone to lacquer thinner

Total net revenue

Difference in net revenue

Part $4$

$$Decision:

$$

Sell acetone as is$.$

Process further into lacquer thinner.