Answer:
$2,600,000
Explanation:
Sunk cost refers to the costs that cannot be recovered by the businesses.
Sunk costs:
= Cost incurred - Cost recoverable
= (4 × $1,000,000) - [(2 × $500,000) + (2 × $200,000)]
= $4,000,000 - ($1,000,000 + $400,000)
= $4,000,000 - $1,400,000
= $2,600,000
Therefore, the sunk costs of purchasing the machines is $2,600,000.
