Premier Enterprises is a medium-sized, family-owned firm that manufactures two products from a single production process: product A and product B. The budgeted details of the two products are as follows: Product A Product B Selling price per unit, R/unit 200 160 Cost per unit, R/unit: Direct materials 70 80 Direct labour 30 20 Variable overhead 12 8 Fixed overhead 24 20 Profit per unit, R/unit 64 32

Budgeted production and sales for the year ended 30 June 2023 are: Product A 15 000 units Product B 12 500 units The fixed overhead costs included in Product A relate to apportionment of general overhead costs only. However, the fixed overhead costs of product B also includes specific fixed overheads totalling R50 000.

Required: 6.2.1. If only product A were to be made, how many units would need to be sold in order to achieve a target profit of R1200 000 each year? (Hint: apply your understanding of cost-volume profit analysis in this case). (5 marks) 6.2.2. If only product B were to be made, what will be the target profit if 20 000 units are sold each year?