Business Finance Homework Help
Business Finance Homework Help. Accounting for Planning and Control quiz 8 9.10.11
SmithSmith
Chemical has spent
$ 243 comma 000$243,000
to refine
71 comma 00071,000
gallons of acetone, which can be sold for
$ 2.50$2.50
a gallon. Alternatively,
SmithSmith
Chemical can process the acetone further. This processing will yield a total of
64 comma 00064,000
gallons of lacquer thinner that can be sold for
$ 3.10$3.10
a gallon. The additional processing will cost
$ 0.65$0.65
Requirements
| 1. |
Identify the sunk cost. Is the sunk cost relevant to SmithSmith‘s decision? Why or why not? |
|
2. |
Should SmithSmith sell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives. |
Business Finance Homework Help
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