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Castillo Chemical has spent $243,000 to refine 71,000 gallons of acetone, which can be sold for $2.60 a gallon. Alternatively, Castllo Chemical can process the acetone further. This processing will yold a total of 64,000 gallons of lacquer thinner that can be sold for $3.20 a gallon, The additional processing will cost $0.80 per gallon of lacquer thinner. To sell the lacquer thinner, Castillo Chemical must pay shipping of $0.18 a gallon and administrative expenses of $0,12 a gallon on the thinner. Requirements 1. Identify the sunk cost. Is the sunk cost relovant to Castillo's decision? Why or why not? 2. Should Castillo 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 Casbilo's decision? Why or why not? The: is a sunk cost that difer between alternatives of solling as is or processing further, Consequently, this sunk cost of is to the sell or process further decision. Requirement 2. Should Castillo sell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference botween the two alternatives. (Enter a " 0 " for any zero amounts. Use a minus sign or parentheses in the Difference column 1 the Sel As is amount exceeds the Process Further amount.)

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