Question

helppp

note: i took 2 pictures because it wouldnt fit in one photo

i Requirements Fill in the diagram for White's alternatives. Identify the sunk cost. Is the sunk cost relevant to White's decision? 3. Should White sell the petroleum distillate or process it into cleaner fluid? Show the expected net revenue difference between the two alternatives. Print Done

Answer 1

1						Revenues from
						selling as is
						396800
	Joint costs					(64000*6.20)
	of producing
	64000
	gallons of		Cost of			Revenues from
	petroleum		processing			processing
	distillate		further			further
	$204,000		103600			486640
			(56000*1.85)
	Revenue from processing further:
				$	$
	Sales price				9
	Less:
	Sales commission			0.12
	Transportation charges			0.19	0.31
	Net sales price		a		8.69
	Cleaner fluid to be sold		b		56000
	Revenue		a*b		486640
2	Joint cost of producing is a sink cost since it is already incurred and ti is irrelevant to decision making
3					Sell petroleum distillate	Process into cleaner fluid	Incremental profit/(loss)
					a	b	b-a
	Revenue				396800	486640	89840
	Less:further processing cost				0	103600	103600
	Incremental (loss)						-13760
	White should sell the petroleum distillate since processing further provides an incremental loss of $ 13760