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Could someone explain the formula i need to use for the problem below? Vickery Machining Company is nearly finished constructing a specially designed piece of
Could someone explain the formula i need to use for the problem below?
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 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 S600,OOO, after which the product can be sold for S750,OOO, or the equipment can be scrapped for $100,000 a. Identify each ofthe costs in this scenario as a sunk cost, incremental cost, or incremental revenue. b. What should Vickery do? Complete this question by entering your answers in the tabs below. Required A Required B Identify each of the costs in this scenario as a sunk cost, incremental cost, or incremental revenue. Costs incurred to-date Costs to rebuild Potential sales price Required A Required B
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