Question
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
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 R R 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? (3 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started