(2) Taipei is considering increasing the annual spending on advertising by $175,000. The managers believe that the investment will translate into 10% increase in unit sales. Should Taipei make the investment? Show your calculations. (8%)

(3) In 2020, Taipei believes that it will only be able to sell 2,900 units at the price calculated in requirement (1). Managers have identified $125,000 in fixed cost that can be eliminated. If Taipei wants to maintain at an 8% markup on full cost, what is the target variable cost per unit? (10%)

5. AB Company is considering replacement of its old machine with a new, more cost-saving one. Information related to the old and new machines follows: | Original cost---old machine | $60,000 | | --- | --- | | Book value---old machine | $50,000 | | Current market value---old machine | $42,000 | | Annual operating cost---old machine | $14,000 | | Purchase price---new machine | $75,000 | | Installation cost---new machine | $2,000 | | Annual operating cost---new machine | $6,000 | The old machine had been purchased a year ago. AB estimates that either machine has a remaining useful life of 5 years. At the end of 5 years, either machine would have a salvage value of zero. Ignore the effect of income taxes and the time value of money. Required: (1) Should AB purchase the new machine? Show your calculations. (10%)

(2) Is there any conflict between the decision model and the incentives of the manager who has purchased the old machine and is considering replacing it a year later? (5%)

(3) At what purchase price would AB be indifferent between purchasing the new machine and continuing to use the old machine? (5%)

114年 - 114 國立臺北大學_碩士班一般入學考試試題_會計學系：成本與管理會計學#146936

111年 - 111 國立臺北大學_碩士班一般入學考試試題_會計學系：成本與管理會計學#146952

109年 - [非官方正解]109 輔仁大學_碩士班招生考試_會計學系：成本學與管理會計學#105745

108年 - 108 國立臺北大學_碩士班一般入學考試試題_會計學系：成本與管理會計學#146948