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Kyler Chemical has spent $245,000 to refine 70,000 gallons of acetone, which can be sold for $2.60 a gallon Alternatively, Kyler Chemical can process the acetone further. This processing will yield a total of 60,000 gallons of lacquer thinner that can be sold for $3.30 a gallon. The additional processing will cost $0.45 per gallon of lacquer thinner. To sell the lacquer thinner, Kyler Chemical must pay shipping of $0.22 a gallon and administrative expenses of $0.15 a gallon on the thinner. Requirements 1. Identify the sunk cost. Is the sunk cost relevant to Kyler's decision? Why or why not? 2. Should Kyler 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 Kylor's decision? Why or why not? is The is a sunk cost that differ between alternatives of selling as is or processing further. Consequently, this sunk cost of to the sell or process further decision Requirement 2. Should Kyler sell the acetone as is or process it into lacquer thinner? Show the expected net revenue difference between the two alternatives. (Enter a "O" 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 As Is Further Difference Less: Not benefit to operating income per batch Decision

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