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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. Because 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 of the costs in this scenario as sunk, out-of-pocket, or incremental.
b. What should Vickery do?
Complete this question by entering your answers in the tabs below.
Required A
Identify each of the costs in this scenario as sunk, out-of-pocket, or incremental.
\table[[Costs incurred to-date,],[Costs to rebuild,],[Potential sales price,]]
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