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Vickery Machining Company is nearly finished constructing a specially designed piece of machining equipment when...

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Accounting

Vickery Machining Company is nearly finished constructing a specially designed piece of machining equipment when the customer declares bankruptcy and cannot pay for the equipment. Vickery estimates that the cost associated with making the uncompleted equipment was $1,800,000. Since the machining equipment was specially designed for the customer, there are no other buyers for the equipment unless it is rebuilt. The cost to rebuild is $600,000, after which the product can be sold for $750,000, or the equipment can be scrapped for $100,000. a. identify each cost in this scenario as a sunk cost, incremental cost, or incremental revenue. b. what should Vickery do? A. 1. cost incurred to date 2. cost to rebuild 3. potential sales price B. what should vickery do?

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