Emmanuella Petroleum has spent $204,000 to refine 62,000 gallons of petroleum distillate, which can be sold for $6.40 per gallon. Alternatively, Emmanuella Petroleum can process the distillate further and produce 56,000 gallons of cleaner fluid. The additional processing wil cost $1.75 per gallon of distillate. The cleaner fluid can be sold for $9.00 per gallon. To sell cleaner fluid, Emmanuella Petroleum must pay a sales commission of $0.13 per gallon and a transportation charge of $0.18 per gallon. Read the requirements.
Emmanuella Petroleum has spent $204,000 to refine 62,000 gallons of petroleum distillate, which can be sold for $6.40 per gallon. Alternatively, Emmanuella Petroleum can process the distillate further and produce 56,000 gallons of cleaner fluid. The additional processing wil cost $1.75 per gallon of distillate. The cleaner fluid can be sold for $9.00 per gallon. To sell cleaner fluid, Emmanuella Petroleum must pay a sales commission of $0.13 per gallon and a transportation charge of $0.18 per gallon. Read the requirements.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Fill in the diagram for Emmanuella Petroleum's alternatives
Transcribed Image Text:Joint costs
of producing
62,000
gallons of
petroleum
distillate
Cost of
processing
further
Revenues from
selling as is
Revenues from
processing
further
Transcribed Image Text:Emmanuella Petroleum has spent $204,000 to refine 62,000 gallons of petroleum distillate, which can be sold for $6.40 per gallon. Alternatively, Emmanuella Petroleum can process the distillate further and produce 56,000 gallons of cleaner fluid. The additional processing will
cost $1.75 per gallon of distillate. The cleaner fluid can be sold for $9.00 per gallon. To sell cleaner fluid, Emmanuella Petroleum must pay a sales commission of $0.13 per gallon and a transportation charge of $0.18 per gallon.
Read the requirements.
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