QUESTION 1 [15 MARKS]

1.1. Study the information provided below and answer the following question. (6 marks)

INFORMATION

APT Enterprises is a manufacturing entity, which produces a range of products. It has developed a budget for the life cycle of a new product, X1. The information in the table below relates exclusively to product X1:

	Lifetime total	Per unit
Production and sales units	360 000
Direct manufacturing costs		R25
Machine hours		4
Design costs	R1 200 000
Depreciation costs	R400 000
Decommissioning costs	R50 000

APT Enterprises has budgeted its total fixed production overheads to be R36 million each year and total machine hours are budgeted to be 45 million hours. The company absorbs overheads on a machine hour basis.

REQUIRED:

What is the budgeted life-cycle cost per unit for product X1?

1.2. Based on the information provided below, answer the following questions. (9 marks)