Pan Corporation incurs costs of $1.8 million building a custom piece of machinery for one of its customers. The machine is 90% complete when Pan receives notice that the customer has declared bankruptcy. As a result, the customer is not able to accept delivery or pay anything for the machinery it ordered. Due to the custom design of the machine, there are no other potential buyers. Pan can sell the machine as scrap for $80,000 or it can redesign and complete the machine for $900,000, after which it could be sold for $1 million. Given the above information and assuming Pan's cost and revenue estimates pertaining to scrapping or rebuilding the machine are accurate, answer the following questions: 

1. Costs irrelevant to this decision total $. 

2. If Pan sells the machine as scrap, its incremental income will increase by $. 

3. If Pan rebuilds and then sells the machine, its incremental income will increase by $.

Answer rating: 100% (QA)

Step 1 Solution Concept The cost that affects the profit are considered to be the relevant cos... View the full answer